sheppard@caen.engin.umich.edu (Ken Sheppardson) (12/16/88)
From : "The Economic Impacts of the U.S. Space Program", Shnee, Jerome,
Business Admin Dept, Rutgers U. Published in "Social Sciences and
Space Exploration" NASA, EP-192
"A Midwest Research Institute (MRI) study of the realationship between
R+D expenditures and technology induced increases in GNP indicated
that each dollar spent on R+D returns an average of slightly over
seven dollars in GNP over an eighteen-year period following the
expenditure [1]. Assuming that NASA's R+D expenditures produce the same
economic payoff as the average RD expenditure, MRI concluded that the
$25 billion (1958) spent on civilian space RD during the 1959-1969
period returned $52 billion throught 1970 and will continue to stimulate
benefits through 1987, for a total gain of $181 billion.
"Chase Econometric Associates conducted a second econometric investigation
of the relationship between NASA expenditures and the US economy [2].
The first phase of the Chase study employed the 185 inter-industry
input-output model developed at the University of Maryland to analyze
the short-run economic impact of NASA RD expenditures. Simulations of the
input-output model were undertaken assuming that $1 billion of federal
expenditure was transfered ( proportionately ) from other nondefense
programs to NASA with no change in the size of the federal budget.
Chase estimated that the $1 billion transfer would increase manufacturing
output in 1975 by 0.1%, or $153 billion (1971 $s), and would increase 1975
manufacturing employment by 20,000 workers.
"The second phase of the Chase study considered the long-run effects of
NASA RD expenditures. Using a production function which related NASA RD
expenditures to the productivity growth rate iin the US economy from
1960 to 1974, Chase concluded that society's rate of return on NASA RD
expenditures was 43% ( MRI's estimated social rate of return was 33% ).
The Chase second phase also estimated the effects of changes in NASA RD
expenditures on economic growth and stability. Overall, these long-term
estimates confirmed the significant positive effects of NASA RD
expenditures on national productivity and employment levels.
"The Space Division of Rockwell International conducted a third study of
the macroeconomic impact of NASA RD program. Rockwell investigated the
relationship between NASA's Space Shuttle program and employment in the
state of California [3]. Using an econometric model developed at UCLA,
Rockwell estimated that the Space Shuttle program generated an employment
multiplier of 2.8; that is, direct Shuttle employment of 95,300 man-years
in California produced an increase of 266,000 man-years in total employment.
"In each of the econometric studies the investigators qualified their
conclusions by noting several conceptual and data limitations associated
with an aggregate quantification of the returns to the economy of RD
investment. A major limitation of all three studies is the assumption
that each dollar of NASA RD spending -- whether spent on basic research
or development -- is equal"
[1] Midwest Research Institute. "Economic Impact of Stimulated Technological
Activity", Kansas City, Missouri: Midwest Research Institute, November,
1971
[2] Chase Econometric Associates, Inc. "The Economic Impact of NASA RD
Spending : Preliminary Executive Summary" NASA-2741 April 1975,
Also : "Relative Impact of NASA Expenditure on the Economy" Unpublished
NASA Staff Report, March 18, 1975.
[3] Rockwell International, Space Division, "Impact of the Space Shuttle
Program on the California Economy" FD-74-SH-0334, December 1974
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| 00 00 00 00 insert quote | University of Michigan |
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| 00 00 " " | sheppard@caen.engin.umich.edu |
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