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ROCKETS TO REVENUE: THE BURGEONING SPACE ECONOMY

IFSA LSR
Authors: Adyasha Dibyadarshini, Akshata Kalyanaraman, Misha Sharma
Published on: February 24, 2025

The Space Economy: A Global Overview

One small step for a man, and a giant leap for mankind. Space is no longer something which is unfathomable by the human mind. It has been explored, studied, researched upon and has been made famous in popular media. From Harry Nilsson’s song ‘Spaceman’ to the beloved Netflix series ‘Space Force’ to other popular movies like ‘Interstellar’ etc, space has integrated itself deeply with human lives. The space industry is booming and is making strong and swift developments every year. With every passing day, the newspapers are flooded with articles about new satellites, integrated space systems, investments in space and so much more. 

In such circumstances a cardinal question arises – what exactly is the space economy? The Space Economy is defined by OECD as the ‘full range of activities and the use of resources that create value and benefits to human beings while exploring, researching, understanding, managing, and utilising space’. Today, the deployed space infrastructure makes the development of new services possible, which helps in creating new applications, in sectors ranging from meteorology and energy to transport and aviation leading to rapid urban development which is accompanied with social benefits and upliftment.

Estimates by McKinsey show that the ‘global space economy will be worth $1.8 trillion by 2035 (accounting for inflation), up from $630 billion in 2023’. This figure includes both “backbone” applications and “reach” applications. Backbone applications include satellites, launchers, services or GPS and “reach” applications include those for which space technologies help companies generate revenues.

According to McKinsey, in 2023, ‘backbone’ applications made up $330 billion, or slightly greater than 50 percent, of the global space economy, while ‘reach’ applications represented $300 billion. 

Source: McKinsey & Company

Key Players in the Space Arena 

There is a plethora of groups which play key roles in the space economy. These include not only government space agencies of countries but also private companies, investors and so much more. Their roles have been mentioned below: – 

Key Countries in Space 

According to Space Impulse, there are 77 countries with space programs across the world, including those of heavyweights such as the US and China as well as newcomers like Vietnam and Bolivia. To understand the space economy well, it’s necessary to delve deeper into the organizations which these countries are harbouring. The countries with the best space programs have been listed below. 

The United States of America and its space program under the name NASA tops the list. With NASA not just launching successful space programs but also having an amazing brand image including its name being printed on merchandise (which has also been retailed in India), NASA has had a variety of achievements since its inauguration in 1958. With a whooping budget of 22.6 billion dollars, NASA has sent missions like Apollo and has been a key contributor to the International Space Station. It has also sent numerous orbital satellites which have helped understand oceanography and geology. Still having some downsides, according to Space Impulse, NASA must balance politics, PR and science to be considered a grand success. 

Second up comes China. China’s China National Space Administration or CNSA and CNSA’s counterpart China Aerospace Science and Technology Corporation (CASC), a state-owned enterprise that is a major contractor and operator of China’s Long March rocket family and the Shenzhou spacecraft, have developed moon probes and have sent rovers to mars. They have a yearly budget of more than 14 billion US dollars. According to Space Impulse, China is developing their capabilities at rates twice that of the USA. 

On the third position we have Russia’s space program which is under the name of Roscosmos. With roots in the Soviet era, Roscosmos sent humans to the moon and sent probes to Venus too. It also developed and launched the Soyez Rocket which became the sole means of transportation to and from the ISS between the Shuttle’s 2011 retirement and SpaceX’s first crewed launch in 2020. With a budget of 6.7 billion US dollars, Roscosmos was one of the most successful Soviet rule by-products. The recent decline of Russia’s space program, according to Space Impulse, has been the Russia Ukraine war, the China fallout and SpaceX’s growing market capitalization. 

Sharing the fourth and fifth positions are Europe and India respectively. Europe’s agency is under the name of European Space Agency or ESA. One of ESA’s biggest achievements is the launch of ArianeSpace, the launch company and navigation and Earth observational satellite fleets like Galileo and Copernicus. Meanwhile, India’s space agency is under the name of ISRO or the Indian Space Research Organisation. India has launched several lunar probes, a mars orbiter and has even sent an unmanned craft to the moon’s lunar pole. This is accompanied with New Space India Limited, the Indian space program’s commercial arm alongside with satellite manufacturing services. 

Key Companies in the Space Arena 

There are several companies which are now investing in the exploration and commercialization of space. According to Analytics Insight, the top three companies include SpaceX, Blue Origin and Boeing. 

Components of Space Economy

The space economy can be broadly categorised into 3 segments (EY):

  1. Upstream: This segment comprises of activities revolving around research, manufacturing, engineering of satellites, launchpads, space equipment, supply of components and materials, development of sub-systems, integration of full systems, and other ancillary services. Major components of upstream division include satellite manufacturing and satellite launch.
  2. Downstream: The downstream segments constitute of supply and consumer demand of direct, on-earth devices relying on satellite services (satellite technology, signals or data) and basic operations of space and ground systems. Major components of this division include ground segment – Satellite TV, radio and broadband, Global Navigation Satellite System (GNSS) in stand-alone units and in-vehicle systems; and Satellite services such as communication, navigation, tracking, earth-observation, broadcasting, etc. 
  3. End Users (Reach): The end users or reach of space economy comprises of the non-space industries which are derived from space-technology but are not dependant on it, for example PNT for last-mile delivery, supply chain, food and beverage industry; remote sensing for agriculture, disaster mitigation, etc. 

Commercialization of Space:

Over the last few decades, the space economy has seen emergence of private players and startups like SpaceX, Rocket Lab, Virgin Galactic, Axiom Space, etc in the space industry. The advancement of technology and reduced cost of manufacturing and launching satellites have facilitated these commercial ventures of several private companies into an industry previously dominated by state-owned and government agencies. The commercialization has opened new opportunities of economic growth in the form of various activities ranging from satellite-based services to space tourism, space manufacturing and mining. Some of the potential, transformative commercial activities concerning the space sector comprise of:

  1. Satellite-based Services: Several private companies have ventured into providing communications, positioning, navigation and timing (PNT), earth-observation (EO) services, infrastructure and operational services facilitating telecommunications, defence, global-positioning, navigation, in-orbit servicing, real-time space data, internet services, etc. This will revolutionize several earth-based industries such as quick-commerce, food delivery, transportation, etc. and will play an important role in defence and security of nations. 
  2. Space tourism: Space tourism has become something out of fiction and thanks to advanced technology and lax government regulations, several private companies are venturing into this. Companies like Virgin Galactic, Blue Origin, SpaceX have started orbital and sub-orbital spaceflights, primarily catering to ultra-high-net-worth customers. By 2035, the market size of space tourism is expected to reach a whopping $4-6 billion per year. (World Economic Forum)
  3. Space manufacturing: Space manufacturing deals with manufacturing activities performed outside earth’s atmosphere taking advantage of unique space conditions such as microgravity, high radiation, near-vacuum state. In-orbit manufacturing holds potential to facilitate health and healthcare, pharmaceuticals, food and beverage, beauty, etc. In-orbit manufacturing is expected to make $1-2 billion annually. (World Economic Forum)
  4. Space Mining: Space Mining refers to obtaining minerals and other resources such as water from celestial bodies in space. This emerging industry holds immense potential in providing crucial resources for manufacturing and many earth-based industries like beauty and personal care, chemical industries, etc.

Space-based Technology and their Economic Applications 

While the space economy provides innumerable opportunities to core and backbone companies engaged in satellite, hardware, launching, and support equipment manufacturing, it has manifold impacts on several other industries such as defence, navigation, retail, media, supply chain, food and beverage, transportation, insurance, to name some. The following industries have some of the most significant impacts of space industry:

  • Supply chain and Transportation:  

The space industry will revolutionize supply chain and transportation industries: with positioning, navigation and timing (PNT) services enabling more efficient navigation, tracking and earth-observation (EO) services facilitating optimal routes, faster deliveries and reducing delays. The application of space technology in this industry is predicted to yield approximately $410 billion in revenue by 2035, with a growth rate of 14% per year during 2023-35 (World Economic Forum)

Source: World Economic Forum

  • Food and Beverage:

The food delivery platforms will be highly benefitted by advancing PNT technologies, which will facilitate faster and accurate last-mile delivery, optimizing travel routes. The impact of space technology is projected to yield a revenue of $330 billion by 2035, with a growth rate of 11% (World Economic Forum). Besides, space manufacturing is innovating crucial nutrients in a zero-gravity ecosystem that may not have been possible to produce on earth. 

Source: World Economic Forum

  • Retail, consumer goods and electronics:

The application of space technology in these industries are expected to reach $170 billion with a growth rate of 10% by 2035 (World Economic Forum). A key driver of this growth is the increasing reliance on PNT services and use of space-data which facilitate tracking and navigation capabilities in the e-commerce industry. Besides, satellite internet providers such as Starlink, by SpaceX will enable usage of high-speed internet in otherwise inaccessible areas like rugged terrain or border areas bridging digital-divide, e-commerce, logistics deployment. 

Source: World Economic Forum

  • Digital Communications:

Constellations of satellites, positioned in the lower-earth orbit will enable efficient connectivity and communication, even reaching remote areas, enabling wide range of services: residential internet access, corporate networks and expanding Internet of Things (IoT). The digital communication sector is projected to reach $70 billion by 2035, accounting for roughly 5% of the overall space economy, which is expected to reach $1.8 trillion (Mckinsey).

    

  • Media, Entertainment and Sports: 

With robust PNT receivers embedded in devices of users, media, entertainment and sports industry players receive real-time data to improve personalized, location-based services. Further, this technology will revolutionize spatial computing and AR technologies. Besides, satellite internet connectivity will facilitate digital penetration, reduce digital divide and will aid to online content consumption. The impact of space technology in these sectors is anticipated to be $157 billion in 2035 (World Economic Forum).

Source: World Economic Forum

Regulations, Frameworks, and Governance in the Space Economy

Given the rapid expansion of the space economy and crowding of the Earth’s orbit, the UN has called for space regulation as it now requires robust legal and regulatory frameworks. As more countries and private businesses enter space, governance frameworks need to handle issues including resource exploitation, space debris, and jurisdiction issues.

International space governance operates under a set of treaties and principles developed under the United Nations Committee on the Peaceful Uses of Outer Space (COPUOS). Further, the foundation of international space law is the Outer Space Treaty (1967), which established important guidelines such as the prohibition on any country using space for its own purposes and the utilization of space.

Subsequent treaties like the Rescue Agreement (1968), Liability Convention (1972), Registration Convention (1976), and the Moon Agreement (1984) have further refined the international legal framework. Nevertheless, these agreements were formulated prior to the commercialization of space and fall short in addressing modern problems like satellite constellations, space mining, and space debris. It is now necessary to reevaluate existing treaties and adopt new governance structures in light of the growth of private firms such as SpaceX, Blue Origin, and so on. Through programs like the Long-Term Sustainability of Outer Space Activities Guidelines and the Space Debris Mitigation Guidelines, the United Nations Office for Outer Space Affairs (UNOOSA) is actively addressing new issues such as space debris.

The Future of the Space Economy

The space economy is rapidly evolving, driven by technological advancements, increased private sector participation, and international collaborations. By 2040, the global space economy is projected to exceed $1 trillion, fueled by ventures in satellite technology, space exploration, and emerging markets like space tourism, asteroid mining, and in-space manufacturing. This section will explore key predictions for the growth, achievements, and ventures expected to define the future of the space economy.

Primary Growth Drivers

The space economy is expanding rapidly due to a multitude of variables. First, the growth of the space economy continues to depend heavily on satellite services, especially in the areas of communications, Earth observation, and navigation. For example, satellite broadband is anticipated to improve global connectivity and reach underserved areas, which will be crucial in propelling Earth’s digital economies forward. Satellite constellations being deployed by businesses like SpaceX, OneWeb, and Amazon’s Project Kuiper will power industries ranging from climate monitoring to agriculture in addition to providing internet connectivity (Deloitte).

The demand for space-based services, coupled with the reduction in the cost of launching satellites, is another key growth driver. Innovations like reusable rockets, pioneered by companies such as SpaceX, have drastically reduced the cost of access to space, making it more accessible for smaller companies and governments. The decreasing cost of space launches is expected to spur innovation in satellite technology, space exploration, and commercial ventures in orbit.

Achievements and Future Ventures

Looking ahead, several milestones are predicted to shape the future of space exploration and commercialization. One such major achievement is the return of humans to the Moon, with NASA’s Artemis program aiming for a Moon landing by 2025.Both private companies and national space agencies envision building lunar bases, and even extracting lunar resources, such as water ice, which can be converted into rocket fuel (McKinsey). Additionally, Mars exploration is also a significant goal for the future, with missions from NASA, SpaceX, and other entities exploring the possibility of human colonization of Mars.

Emerging Markets and Opportunities

In addition to exploration, emerging markets like space tourism and asteroid mining are likely to transform the space economy. Companies like Blue Origin and Virgin Galactic are pioneering space tourism, offering suborbital flights to private individuals. Currently, space travel is exclusive to wealthier individuals, but its cost is expected to decline, making space tourism a significant sector of the future space economy.

Another critical area is in-space manufacturing, which includes the production of high-value products such as pharmaceuticals, advanced materials, and semiconductors in microgravity conditions. The unique environment of space allows for manufacturing processes that are impossible on Earth, potentially leading to the creation of new industries. Furthermore, the long-term potential for mining asteroids for rare metals could redefine global resource markets. Some estimates suggest that a single asteroid could contain more precious metals than have been mined on Earth, creating a trillion-dollar industry (McKinsey).

Thus, the future of the space economy holds immense potential for growth and innovation. However, potential challenges such as evolution of regulatory frameworks, international cooperation, and prevention of the degradation of Earth’s orbital environment must be kept in mind.

Potential Challenges and Threats to the Space Economy

While the space economy is poised for significant growth, several challenges and threats could slow its progress. There are multiple technical hurdles and obstacles in advanced propulsion systems, deep space exploration, and the development of new spacecraft technologies. These challenges demand sustained collaboration between governments, industries, and academic institutions to drive technological breakthroughs (NewSpaceEconomy). Another critical concern is space debris, which poses a significant threat to the sustainability of space operations. The increasing amount of debris in Earth’s orbit raises the likelihood of collisions with satellites and spacecraft, potentially leading to catastrophic chain reactions, known as the Kessler Syndrome. This could endanger both existing and future space missions, increasing the cost and risk associated with space activities (Frontiers).

Further, current international laws governing space are outdated and insufficient to manage the growing involvement of private companies. The absence of consistent global regulations leads to uncertainties in resource allocation, space traffic management, and liability, which could stifle innovation and cooperation (NewSpaceEconomy). Addressing this range of challenges will require efforts to balance economic ambitions with the need to protect and preserve space for future generations.

Conclusion

The influence of space technology and space-based services is growing by leaps and bounds in our daily lives. With space becoming more and more accessible and as an idea, becoming more and more fathomable for all – the space economy is all set to grow by huge percentages in the coming years.

We have seen how there exist a multitude of stakeholders when it comes to space. These stakeholders range from the country-based space programs like NASA, JAXA, ISRO etc to media which helps in popularising space-based activity and makes populations cognizant about space-based ideas and events. We have seen how governments like the US and China (and now even India) are spending billions on their space programs to increase the levels of technology utilised and the number of areas explored. We have also seen the key role which private companies like SpaceX and Blue Origin play in the development of space, showing that the sector which was once dominated by governments is now seeing new players in the arena. Not only this, but we have also seen how the space sector has the ability to reduce social inequities and contribute to the overall development of the economy of a country. Space based services like GPS etc are integrating with our lives and newer satellites are being launched on a daily basis. This is complemented by the developments in space-based technologies which are now aiding a variety of different companies, ranging from digital services to food and beverage etc, to develop and enhance their supply chain and transportation processes. 

The space economy is poised with unprecedented growth and opportunities, including growing satellite services, space exploration, emerging markets in space tourism and in-space manufacturing, and the potential for asteroid mining. The rapid expansion of the space economy necessitates robust legal and regulatory frameworks to address potential challenges such as space debris, resource extraction, and jurisdiction in outer space. Space is no longer a distant place which existed only in our imaginations, but is now a reality which is within the limits of what man can reach. As we continue to utilise space-based resources, we must prioritise sustainable development and international cooperation. By embracing the new frontier of the space economy, we can unlock better and brighter futures for the coming generations. As Jeff Bezos put it so eloquently: 

“Space is not the final frontier, it’s just the next step to humanity’s journey”

References