Space Economy and its contemporary impact

© 2021 modified Article based on Master Thesis | Gaiane Hakobian | Space Economy:Gravity free market

This is already the exact time to officially establish the Space industry for every country in the world, as in this globalized economy it will not be contemporary not to do that. Already decades there was a huge lack of investment in space-based technologies and services also not so significant growth both in developed and developing countries. The nowadays space industry is facing only slight reduction of cost of satellites, launch vehicles and also of the launching process itself, so here is the gap where government has to establish low-cost policy. This kind of industry cannot be classified under free market model yet, in contrast it may be named as a hybrid economy, where public sector needs to create various infrastructures and develop space-based technologies for beneficial functioning of private sector in space and sometimes even non-space markets.

It is historically proven that in space sector only government is able to help the development of technologies and suggest the contract, which can help private companies to cooperate and at the same time establish themselves. However, this is not anymore necessary fact for private sector, which in contrast, requires strong commercialization of the sector with the sufficient legal base and free of governmental intervention, in order to create the free competitive market.

From the other side developing countries seems to find already solution to that via entering the market via disruptive innovations and in this way creating new market segment inside the Space industry.

Space economy is a very extensive concept, which embraces diverse segments and productions. That is why even now it is not possible to capture a precise characterization of its frontiers. Nowadays “space economy” turn out to be an absorbing field to study, because of its stimulating innovation competencies, which are opening various commercial potentials. The fast development space-technology based industrial projects can lead to the effective progress in the different sub-branches of the economy, and so far, can be discussed under the title of “space economics” which could eventually become “interplanetary economics”. At the present time, those few definitions, which can describe properly the meaning of “space economy”, were suggested by the report of OECD on 2007 and Tkatchova S. (2011), which is stating the following:

“All public and private actors involved in developing and providing space-enabled products and services. It comprises a long value-added chain, starting with research and development actors and manufacturers of space hardware (e.g. launch vehicles, satellites, ground stations) and ending with the providers of space-enabled products (e.g. navigation equipment, satellite phones) and services (e.g. Satellite-based meteorological services or direct-to-home video services) to final users.” OECD, 2007

It is important to notice that above-mentioned definition is linked only to the space market sectors and programs of the space industry and that it is not representing information connected to national GDP or employment. However, any definition should have nonspecific context and should not be correlated to specific market sectors, because as it is known, based on costumers’ needs, any particular application and segment also can be changed over time. Taking this into account we are suggesting the second author’s definition as a description of space economics, which is the following:

“Space economics is a science concerned with the description and analysis of the design, development, production, distribution and use of products and services, derived by the use of space-based technologies and concepts.” S. Tkatchova

Participants of the Space Market

So far space industry was developed in two-branched, which are research and development (R&D) markets with concentration mainly on the environment, health, nutrition, biotechnology and emerging markets with a concentration on infrastructure, sponsorship, education, space-flight and broadcasting. In this market, we can differential several partakers, such as national space agencies, system developers, subsystem dealers, equipment contractors, facility backing companies, also institutional customers, which are national and international civil space, climatological agencies and commercial customers, who represent the market for launch service providers and satellite operators (Bromberg, 2000). Commercial satellite administrators are regularly alluded to as telecommunications administrators and are spent significant time in satellite operations and the arrangement of correspondences, communicate and portable individual and expert interchanges. There are likewise launch benefit administrators that incorporate and work to provide launch administrations to institutional and business clients. System developers are the organizations that have the skills and information to the configuration, create and coordinate an entire space satellite. Subsystem dealers are organizations that plan, create and deliver subsystems like solid boosters or solar generators. Equipment dealers are organizations that create and deliver gear for the productive assembly of space frameworks and subsystem stages. Facility backing companies are those who give ground framework outline, upgrading, fabricating, operations of non-business frameworks, and engineering administrations (ASD -Eurospace, 2011).

Space agencies should plan and create key empowering innovations and “spin-in” innovation arrangements and procedures from non-space enterprises. Space industry was always innovation affected, as opposed to market-driven ones and, with a specific end goal to strengthen commercialization, it is crucial that future markets be assembled in view of clients’ needs or basic highlights, along these lines counteracting innovation-driven market division and empowering the market-driven one (Tkatchova & van Pelt, 2007). A portion of the issues confronting space organizations, privately owned businesses when they endeavored characterizing the space markets where the bellow mentioned ones:

  1. space total commercialization is going to be something revolutionary
  2. assorted variety of space applications and presence of various value chains in the diverse space markets
  3. crew and cargo services to the commercial markets are emerging
  4. the absence of advantage identification and arrangement
  5. the absence of industrial experience and market data of initial consumers
  6. non-space organizations are not able yet to monitor microgravity opportunities, while ISS have access to all space-based researches.

In the space industry, there are distinctive approaches to accomplish market division. The diverse connections and interdependencies between various market portions will directly affect the improvement of new space applications, innovation advancement, and future advantages. Consequently, the market division will be isolated into three fields: R&D, industry and innovative sectors, and this segmentation we can see below in Table 1 (Doldirina, 2007).

As a result of it’s not so long historical origin (the late 1980s), in contrast to the other industries, the space market has been not so much mentioned in the academic reports. In this way, it is valuable to feature developing patterns since 1996, the worldwide space industry has had a 16% yearly income growth rate. It was assessed that 1,500 satellites would be propelled from 2000 to 2015 and overall incomes for launch activities would reach $45 billion by 2007. Among 2001 to 2003, a few business organizations ended up plainly operational, and they are profoundly affecting worldwide financial advancement and society from numerous points of view, such as 8 space-based radio, space satellite mobile phone benefit, exceedingly exact worldwide navigation frameworks, remote detecting and giving worldwide HD TV access to everyone on the Earth (Shove, 2005). As can be seen in Figure 1 over the most recent 40 years space area income’s has increased essentially quicker than the worldwide GDP (Gabriele, 2016). Regardless of robust variation in several correlated segments, such as defense, in the space segment the revenue also, in general, was not drastically influenced by the economic crisis of 2008 (OECD, 2014). In Figure below, it is illustrated the continued development of especially commercial space revenue for already 40 years.

Commercialization of space technologies can lead to financial advantages with indirect and direct favourable circumstances for both space and non-space companies and agencies:

  • Indirect economic favorable circumstances will be viewed as innovation advancement, global associations environmental protection and what is quite important free publicity.
  • Direct economic favorable circumstances are showing the direct effect of employment and the increase in revenues. While creating new markets the quality of innovation unwavering is also having the visible progress.

Giving importance to a non-exclusive segmentation under space, launch, ground and applications section will allow future contractors associated with the modern use of space-based innovation to pick the important administrations to use for enhancing their production, administrations or procedures. The below-mentioned segmentation of space-based items and activities will allow the space companies, specialist developers and end-clients to recognize benefits that they will pick up from the business utilization of space innovation. Furthermore, they will have the capacity to distinguish the zones in which they can create innovation unwavering quality and interoperability (direct favourable circumstances) and innovation advancement (indirect favourable circumstances) (Tkatchova & van Pelt, 2007). So here is the segmentation:

  • space segment — services, which are provided via onboard space stations to help the effectiveness of certain commercial projects;
  • launch segment — incorporates the selection of launchers
  • ground segment — research centres, offices, programming solutions for information administration
  • applications segment — investigation on space applications which are being produced on-board of space stations.

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