Space: Stimulating Economic Growth Today and Tomorrow

2. Space: Stimulating Economic Growth Today and Tomorrow 253 Russell Senate Office Building Washington, DC July 27, 2009

3. Robert DickmanExecutive Director, AIAA

4. David LogsdonExecutive Director, Space Enterprise Council/ Techamerica

5. Edward MorrisExecutive Director of Strategic Business Development, ITT Space Systems

6. John PorterCEO, Astrogenetix

7. Saving lives on Earth by developing products in space

8. Company Overview • Subsidiary of Astrotech Corporation (Nasdaq: ASTC) • Astrotech (formerly SPACEHAB) has a 25 year heritage in space, sending science and cargo to microgravity • Astrogenetix is a biotechnology company engaged in biomarker discovery and drug development utilizing microgravity

9. ISS Utilization • In 2005 Congress passed law designating a portion of the International Space Station (ISS) as a National lab • Astrogenetix entered into Space Act Agreement for use of the shuttle and ISS for its R&D activities • Company’s activities have been designated National Lab Pathfinder (NLP) missions by NASA

10. Vaccine Development • Discovered increased microbial virulence in microgravity • Applied knowledge to develop space flight platform for identifying factors responsible for increased virulence • This leads to viable targets for commercial vaccine development • Speeds up development timeline • Reduces cost for drug/vaccine development

11. Salmonella Development • Salmonella vaccine target identified • Plan to seek Institutional Review Board (IRB) and submit an Investigational New Drug (IND) application to FDA

12. MRSA Development • Methicillan-resistant Staphylococcus aureus (MRSA) • Survey flight on  Shuttle Discovery (STS-119) • Additional research aboard Shuttle Atlantis (STS-125) • Planned manifest aboard Shuttle Discovery (STS-128)

13. Pierre ChaoManaging Partner, Renaissance Strategic Advisors

14. Molly Macauley, Ph.D.Senior Fellow and Director, Academic Programs, Resources for the Future

15. Space and Economic Growth Comments for “Space: Stimulating Economic Growth Today and Tomorrow – Current and Future Impact of Space Technology and Development” Senate Committee on Commerce, Science and Transportation 27 July 2009 Molly K. Macauley

16. Economic Growth • Defined and measured as output per capita overtime • Widely acknowledged as an imperfect definition and hard to measure • Often incorrectly equated with ‘number of jobs’ • Example: Increase jobs simply by replacing bulldozers with people and shovels but may not contribute to economic growth • Example: Increase ‘high-skilled’ jobs but usually implies loss of other jobs; ambiguous outcome for growth • As conventionally defined omits or only indirectly reflects value of: • public goods (for example, national security, freedom of expression, Yellowstone and other national parks, research and development) • improvements or reductions in quality of public health and the environment • value of many benefits commonly attributed to space activities (for example, as given in forthcoming NRC “America’s Future in Space” study: new knowledge, inspiration, ‘cultural enrichment,’ ‘strategic leadership’, ‘stewardship of earth’) • Can tangle causality (growth may foster freedom of expression and vice versa) • In short, may underestimate or overestimate ‘quality of life’

17. Redefine economic growth as ‘productivity’ or ‘vitality of the economy’ • Easier to discuss what influences economic vitality • Influenced markedly by • Technological progress • Defined as resulting from something in-between (Mokyr, 2005) • unexplainable (even ‘miraculous’) and • the ‘rational and purposeful application of R&D’ and ‘growth of complementary human and physical capital’ • Further defined as knowledge • Institutions and governance(domestic and other countries’ markets, competition, cooperation; international trade; and restraints on these) • Information (information itself, and the free flow of information)

18. Previous studies of the contribution of space activities to economic growth • Summaries and references in: Reinventing NASA (CBO, 1994), Encouraging Private Investment in Space Activities (CBO,1991), The NASA Program in the 1990s and Beyond (CBO,1988), How Federal Spending for Infrastructure and Other Public Investments Affects the Economy (CBO,1991) • Reinventing NASA (1994) • Management and procurement reform, new relationships with the private sector, intragovernmental coordination and international cooperation • The ‘breaking bow wave’ of an inadequate NASA budget for the coming decade • Acknowledging different perspectives on the benefit of people in space • The problem of cost overruns

19. Reinventing NASA (CBO,1994) • Findings related to short- and long-run economic growth • “NASA’s spending does not have a uniquely large short-term effect on the US economy; all federal spending for goods and services tends to stimulate the economy temporarily, increasing growth and employment for a short time (unless at full employment)” • “Under certain conditions, NASA’s expenditures could have a slightly larger or smaller short-run effect on the growth of the economy and on employment compared with federal spending overall • Slightly larger - although still temporary - if concentrated in industrial sectors or regions with high unemployment • Slightly smaller - and still temporary - if in industries with high value added per worker • On balance, nothing suggests that unique aspects of NASA’s spending cause it to affect the economy differently from other types of federal spending for goods and services” • ‘Multiplier’ effects (returns to the economy for every $1 spent) incorrectly model diffusion of NASA spending to be like that of R&D in health and agriculture • ‘Spinoffs’ are a problematic measure because an alternative may have been devised, possibly at lower cost and sooner • Not in the report, but additionally: Counting on spinoffs to justify investment is not a sound approach; can justify pretty much any investment on such a basis

22. Economic vitality: role of competition • Significantly less domestic competition within traditional aerospace industry • Restricts government’s choices; few alternatives if government is not satisfied; limits government’s ability to reduce cost • May lessen creativity and innovation that contribute to economic growth • Yes, if traditional industry prefers status quo and uses ‘rent-seeking’ (redistributes wealth rather than creates it) • No, if healthy internal corporate R&D budget and ability to ‘appropriate’ return on a new idea (therefore, have incentive to come up with a new idea) • Increase in opportunities from new people and ideas, outside of traditional industry • Return to Lindbergh/Goddard era of risk taking, private wealth • Response by government and traditional sector? • History of technological progress emphasizes that “protection of innovators and entrepreneurs… [is] of central importance …” (Mokyr, 2005) • Some suggest NIH-like centers of excellence (see Major General James Armor, comments at “A Day Without Space,” 16 Oct 2008) • Some suggest ARPA-S (forthcoming NRC report) – sort of “back to the future” since part of DoD’s ARPA in 1958 was transferred to NASA in 1960

24. Economic vitality: role of international ‘coopetition’* • Fortune Magazine, 1990s “100 Things America Makes Best” – communications satellites • Now, “Buy America” advantages are much less clear for a host of space activities • “Not made here” gives us more choice (consumers of space services benefit from international competition) • What are ‘appropriate opportunities for international collaboration’ (charge to the Augustine II panel) • …..And what are not – competition can be a very very good thing • Some guidelines • “absolute advantage” and “comparative advantage” • “coopetition” – blending cooperation and competition as in practices of multinational corporations * Luo, 2004

25. Economic vitality: role of information and information infrastructure An illustration at the intersection of the Administration’s objectives for reshaping the nation’s energy markets and climate policy Role of Earth observations data and ongoing R&D for how best to use them • Renewable energy: in mapping and managing renewable energy resources (see CCSP, 2008) • New roles for agencies: in supporting regulatory and statutory responsibilities (see Energy Independence and Security Act of 2007, Section 712) • Informing climate policy and leveraging emerging (Europe) and possible (US, other) related markets (see H.R. 2454, The American Clean Energy and Security Act of 2009) Two examples: GHG trading and offsets

28. Example 2: “offsets” and forest carbon • Above-ground carbon • Tropical forests: 300 billion tons • Old-growth forests: 0.3 to 0.5 billion tons • Back-of-the envelope: about $44 billion (with CO2 trading at $110/ton, 2008, European Climate Exchange) • Information leverages dollars. Earth observations data are essential to inform carbon measurement and markets. • From Sedjo, 2009. Note: Emergence of a forest-carbon market would change the supply of carbon credits and in turn influence carbon prices

29. Summing up • Conventional definitions of economic growth are widely agreed to be imperfect • Space activities and many other activities may not contribute to economic growth as formally defined • … or, they may not make an easily discernible contribution to it • … but the activities may be worth doing • Economic vitality and productivity are a more useful means of expressing benefits and valued results • Then: we can frame decisions around, and even measure • technological progress, • institutions and governance, and • information to better insure that we contribute to growth • In promoting long-term economic vitality, how we carry out space activities is almost as important as what we do

30. References • Cookson, Clive. 2009. “NASA Dominates as Rivals Play Catch-Up,” Financial Times 16 July. • “A Day Without Space: Economic and National Security Ramifications,” US Chamber of Commerce and George C. Marshall Institute, 16 October 2008, at http://www.marshall.org/pdf/materials/695.pdf • Luo, Yadong. 2004. Coopetition in International Business (Copenhagen, Denmark: Copenhagen Business School Press). • Mokyr, Joel. 2005 “Long-Term Economic Growth and the History of Technology,” Chapter 17 in Handbook of Economic Growth, Vol. 1B, Philippe Aghion and Steven N. Durlauf, eds. (Elsevier). • National Research Council. Forthcoming. America’s Future in Space: Aligning the Civil Space Program with National Needs (Washington, DC: National Academies Press) • No author. 2001. “US Industry Consolidation: A Work in Progress,” Aviation Week and Space Technology 3 December 2001, pp. 50-51. • Sedjo, Roger. 2008. “Avoided Deforestation: How costly? How Powerful a Tool?” Draft working paper, Washington, DC: Resources for the Future, 16 April. • US Climate Change Science Program (CCSP). 2008. Uses and Limitations of Observations, Data, Forecasts, and Other Projections in Decision Support for Selected Sectors and Regions, Synthesis and Assessment Product 5.1 at http://www.climatescience.gov/Library/sap/sap5-1/final-report/ • US Congressional Budget Office. 1994. Reinventing NASA: A CBO Study (Washington, DC: Congressional Budget Office), March. • US Environmental Protection Agency, 2009. “EPA Analysis of the American Clean Energy and Security Act of 2009 H.R. 2454 in the 111th Congress,” 23 June at http://www.epa.gov/climatechange/economics/pdfs/HR2454_Analysis.pdf

31. Patrick LiuMarket Analyst, AIAA

32. Space & Technologies • A space program has always been originated and funded from a national level • Space endeavor too large to be handled by the private sector: financial commitment, technical disciplines involved • Materials (composites, alloys, metals) • Hardware and software • Automation and robotics • Electronics, sensors and optics • Communications • Power and energy devices • Investment cycles longer than most private investors would tolerate: human capital, expertise & infrastructure • Intangible benefits: inspiring, and pride

33. Space Technology Characteristics • Space research has focused on developing and perfecting technologies and processes to unprecedented levels, characterized by: • Low weight • Strength and durability • Efficiency and reliability • Compactness • Temperature resistance • Radiation resistance • Corrosion resistance

34. Space Technologies in Our Life • TV Satellite Dish • Ear Thermometer • Firefighter Equipment • Smoke Detector • Memory Foam • Medical Imaging • Scratch-resistant Lenses • Aircraft Ice Protection System • Laser Eye Surgery Equipment Courtesy to NASA

35. AIAA Emerging Space Technologies AIAA’s Emerging Technology Committee issued the 10-hot technologies for future aerospace • Advanced Materials, such as nanotechnology and composites used in space flight • Remote Sensing Technology, including UAVs and Satellites in GEOSS • UAVs outfitted with special sensors to help scientists collect data, predict hurricane's intensity, track fast Arctic summer ice will melt, etc. • Advanced Space Propulsion Technology, including plasma-based propulsion • Commercially useful for boosting communication satellites and other Earth-orbiting spacecraft to higher orbits, retrieving and servicing spacecraft in high orbits around the Earth, and boosting high-payload robotic spacecraft on very fast missions to other planets

36. Technology Spin-offs at ESA & JAXA • European Space Agency (ESA) • “Technology Transfer Programme Office” • Successfully transferred over 200 technologies to private sector • ESA Business Incubation • Help start-up business to utilize space technology • Provide funds and business development • Bring in private investors • Japan Aerospace Exploration Agency (JAXA) • “Industrial Collaboration Department” • Work closely with Japan’s advanced commercial industry to transfer technologies from space researches

37. What we see at AIAA • Space related technical papers • Professional members • domestic vs. int’l • Aging domestic membership • Engineers in the “pipeline” • Space programs • Fundamental researches • Very long lead time

38. Douglas ComstockDirector, Innovative Partnerships Program, NASA

39. SPACE: Stimulating Economic Growth Today and Tomorrow Doug ComstockDirector, Innovative Partnerships Program - NASA U.S. Senate Committee on Commerce, Science, and Transportation Hearing Room 253, Russell Senate Office Building Washington, D.C.

40. How Does Space Stimulate Economic Growth? • Activity directly related to space products and services. • Satellites, launch vehicles, ground systems. • $257 billion in 2008. • New capabilities, businesses, products and services derived from space technologies. • Spinoffs from the space program. • More than 1,700 documented from NASA alone. • Productivity enhancements and quality of life improvements from the above, such as: • Efficient tracking and positioning using GPS. • Improved health from telemedicine, enriched baby food and other medical advancing spinoffs.

41. Global Space Activity From the Space Report 2009, Space Foundation $257 Billion in Space Activity Globally in 2008

42. Public-Private Partnerships • NASA is looking for public-private partnerships in many areas that are Win-Win-Win. • Private sector gains by having access to Government IP, facilities, expertise, resources, etc. • Government gains by having access to private sector expertise, resources, innovation, etc. • Taxpayer gains by leveraging tax dollars and getting improved government systems/services. • Traditional roles between Government and private sector are beginning to shift. • Private sector role as partner rather than contractor. • Government purchase of services instead of hardware. • Creating broader opportunities for innovation.

43. What Can NASA and IPP Provide? • Funding or Leveraged Resources. • NASA SBIR/STTR, over $100 million annually, funds several hundred small businesses. • IPP Seed Fund partnerships leverage resources with private sector, academia, and Federal labs. • Centennial Challenges offers millions in purses. • Expertise, Technology, and Software. • Access through licensing and partnerships. • Facilities and Test Capabilities. • Access to NASA’s facilities through partnerships. • Technology demonstration opportunities – FAST. • Facilitation to enable partnerships. • Advocacy as a change agent to try new things

44. “My dream is that one day any American will be able to launch into space and see the magnificence of our home planet as I have been blessed to do.” NASA Administrator Charles Bolden, from remarks at the National Air and Space Museum on Monday, July 20, 2009.

45. NASA Spinoffs Benefit Everyday Life • NASA has a long history of transferring space and aeronautics technologies for public benefit. • NASA’s direction to do this traces to the Space Act that created NASA in 1958: “The Congress hereby declares that it is the policy of the United States that activities in space should be devoted to peaceful purposes for the benefit of all mankind.” • The Act goes on to say that NASA should: “Provide for the widest practicable and appropriate dissemination of information concerning its activities and the results thereof.” Applications of NASA-Derived Technology Public Benefits of NASA-Derived Technology • Health and Medicine • Transportation • Public Safety • Consumer, Home & Recreation • Environmental and Agricultural Resources • Computer Technology • Industrial Productivity • Economic Growth • New Jobs • New Markets • Increased Efficiency • Improved Competitiveness • Quality of Life • Improved Safety • New Products • Lives Saved or Extended • Green Technologies • Environmental Cleanup NASA @ Home & NASA City http://www.nasa.gov/city

46. “As we look to the future, the benefits that we will have for example in fields like health are simply unimaginable.” “What impresses me about the program is the sheer number of spin-offs and their great variety.” Historical Views of Space Technology Benefits “I have to admire what our efforts in space have produced. Better tools for heart surgery, improved techniques for fighting cancer and many more achieve-ments which can help all of us live longer .” “People are not aware of the enormous tech-nological achieve-ments that directly benefit and will continue to benefit all of us, not only in this country but all over the world.”

48. Legacy of Economic Benefit • “The Apollo program itself produced technologies that have • improved kidney dialysis and water purification systems; • sensors to test for hazardous gasses; • energy-saving building materials; • and fire-resistant fabrics used by firefighters and soldiers. • And, more broadly, the enormous investment of that era – in science and technology, in education and research funding – produced a great outpouring of curiosity and creativity, the benefits of which have been incalculable.” Remarks of President Barack Obama – As Prepared for Delivery at the National Academy of Sciences, Washington, DC, April 27, 2009

49. Innovative Partnerships Program Matching Technology Needs with Technology Capabilities