Introduction

The U.S. space economy has evolved significantly over the past 70 years. What began in the 1950s as a fully government-supported sector has transformed into a dynamic ecosystem increasingly driven by private sector actors. In the 1960s, the first hints of corporate involvement emerged alongside government-led missions, as post-war political forces and technological advancements launched Sputnik and paved the way for U.S. remote-sensing satellites. Since then, a combination of Cold War necessity, public investment, and groundbreaking research has shaped the trajectory of the space economy, culminating in a modern industry in which innovation and competition among private firms play a central role.

Today’s space economy is experiencing unprecedented growth, generating technological advancements, economic opportunity, and geopolitical influence. Valued at $630 billion in 2023 and projected to exceed $1.8 trillion by 2035, the global space industry is increasingly valuable to modern economies.¹ From groundbreaking satellites to reusable launch systems, these advancements are as important to state economic interests as they are to global influence, security, and exploration.

The United States has invested in this transformation more than any other country, allocating $73.2 billion to space programs in 2023 alone.² This number is likely higher when combined with NASA’s budget. Historically, government investments and strategic policies have driven widespread innovation and enabled private companies to scale operations and develop transformative technologies.³ NASA’s early contracts with SpaceX, for instance, helped support the company’s development, and SpaceX’s technological breakthroughs, in turn, lowered barriers for new entrants in multiple sectors of the space industry, but only those not in direct competition with SpaceX.⁴ Payload providers can take advantage of SpaceX’s lower launch costs, but new launch companies have a harder time breaking into the market. Payload and satellite bus manufacturers are also facing a more challenging environment as SpaceX markets its Starlink bus for other purposes.

International governments, not just the U.S. government, increased spending on the global space industry in 2023.⁵ The space economy contributed $131.8 billion to the U.S. GDP in 2022.⁶ Increasing venture capital investments in space companies indicates the potential for even more growth.⁷ Moreover, space is becoming an increasingly contested environment with adversaries directly threatening commercial and government-owned space-based capabilities.

This paper summarizes CSET’s prior research on the history and health of the remote sensing, launch, and advanced space capabilities markets. It explores the critical role of early U.S. government investment in fostering a competitive and resilient space sector, the technological advancements helping to drive industry growth, and the implications of market consolidation for the economy, innovation, and national security. It argues for sustained public-private collaboration, robust policy frameworks, and strategic investments to ensure that the United States remains the global leader in space technology.

1. “Space Foundation Announces $570B Space Economy in 2023, Driven by Steady Private and Public Sector Growth,” Space Foundation, July 18, 2024, https://www.spacefoundation.org/2024/07/18/the-space-report-2024-q2/; “Space Economy Set to Triple to $1.8 Trillion by 2035, New Research Reveals,” World Economic Forum, April 8, 2024, https://www.weforum.org/press/2024/04/space-economy-set-to-triple-to-1-8-trillion-by-2035-new-research-reveals/; International Space Exploration Coordination Group, Benefits Stemming from Space Exploration (Washington, DC: NASA, September 2013), https://www.nasa.gov/wp-content/uploads/2015/01/benefits-stemming-from-space-exploration-2013-tagged.pdf?emrc=ca90d1; “Space: The $1.8 Trillion Opportunity for Global Economic Growth” (McKinsey & Company, April 8, 2024), https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/space-the-1-point-8-trillion-dollar-opportunity-for-global-economic-growth.
2. “Defense Spending Drives Government Space Budgets to Historic High,” Nova Space, January 21, 2024, https://nova.space/press-release/defense-spending-drives-government-space-budgets-to-historic-high/.
3. Valentina Romei and William Crofton, “Why America’s Economy Is Soaring Ahead of Its Rivals,” Financial Times, December 2, 2024, https://www.ft.com/content/1201f834-6407-4bb5-ac9d-18496ec2948b.
4. “The Space Industry in 2024, and How to Build a Satellite Company,” Acquired, May 24, 2024, https://www.acquired.fm/episodes/the-space-industry-in-2024-and-how-to-build-a-satellite-company.
5. Space Foundation, “Space Foundation Announces $570B Space Economy in 2023.”
6. Tina Highfill, Patrick Georgi, and Chris Surfield, “New and Revised Statistics for the U.S. Space Economy, 2017–2022,” Survey of Current Business, June 25, 2024, https://apps.bea.gov/scb/issues/2024/06-june/0624-space-economy.htm; data for 2023 is not available at the time of writing this paper.
7. Aashna Shah, “Venture Capital Cash Fuels Space Startup Dreams,” Bloomberg, May 15, 2024, https://www.bloomberg.com/news/newsletters/2024-05-15/space-startups-fueled-by-venture-capital-investments.