A Florida State University economics professor's latest research offers a new perspective on the long-held belief that the space race of the 1950s and 60s served as a primary engine for broad American economic growth.
Shawn Kantor, FSU L. Charles Hilton Jr. Distinguished Professor of Economic Prosperity and Individual Opportunity, and co-author Alexander Whalley of the University of Calgary examined whether the massive public investment in research and development (R&D) during the Cold War generated the widespread technological spillovers often cited by modern policymakers.
Rather than overturning the historical significance of the space race, the research provides a nuanced interpretation, highlighting its role as a targeted, mission-driven industrial policy rather than a catalyst for economic-wide innovation.
"For decades, the iconic Moonshot mission has been treated as a kind of economic miracle," Kantor said. "Our research shows a more nuanced story - one where the geopolitical benefits were real, but the economic outcomes were far more targeted and mission-driven than people often assume."
The research, published in the American Economic Review, finds limited evidence that increased federal R&D spending during the space race translated into widespread economic growth across the nation. Instead, Kantor and Whalley show that NASA contracts primarily benefited certain industries and regions, with few signs of broader technological spillovers.
To isolate the causal impact of NASA's spending, the researchers developed a novel empirical strategy using declassified CIA documents. By analyzing intelligence reports on Soviet space technology from the Cold War era, Kantor and Whalley identified which U.S. industries and counties were already specializing in space-relevant research before NASA's major spending initiatives began.
This approach allowed the researchers to distinguish between new growth generated by the space program and growth that reflected pre-existing technological capacity. By relying on Soviet assessments, the analysis captures space-related demand independent of NASA's own potentially biased contracting decisions.
"Research that helps us understand the true impacts upon the national economy of major technological waves like the space race are essential to informing public policy and government investment programs," said Dean Tim Chapin of the College of Social Sciences and Public Policy. "Dr. Kantor and Dr. Whalley's research deepens our understanding of the economic ripple effects of the space race and see this initiative in terms of mission success rather than technological advancement. This is world-class work by world-class economic historians."
"Our research shows a more nuanced story - one where the geopolitical benefits were real, but the economic outcomes were far more targeted and mission-driven than people often assume."
– Shawn Kantor, Florida State University L. Charles Hilton Jr. Distinguished Professor of Economic Prosperity and Individual Opportunity
Kantor and Whalley's findings complicate the familiar narrative of the space race as a "rising tide" for the national economy. While companies receiving NASA contracts experienced large gains in employment and capital investment, often ranging from 35% to 50%, these effects were highly localized, with little evidence of spillovers to other industries within the same county or to neighboring regions.
"Landing Americans on the moon and returning them home safely was an extraordinary engineering achievement, but it didn't generate the kind of widespread productivity gains people often associate with major technological breakthroughs," Kantor said.
Consistent with this interpretation, Kantor and Whalley calculated a fiscal multiplier of about 0.3 during the space race. In practical terms, this means that for every dollar the federal government spent on the space program, local economic output increased by about $0.30, a figure substantially lower than the 0.6 to 0.8 multiplier typically associated with general government spending.
The research also shows that although firms expanded and hired more workers, these changes did not translate into broad productivity gains.
Ultimately, Kantor and Whalley argue that the space race functioned as an applied industrial policy. Rather than producing fundamental new scientific knowledge, the program accelerated and combined existing technologies to achieve a specific geopolitical objective.
For today's policymakers advocating new "moonshot" programs in areas such as climate change or medicine, Kantor suggests a more measured perspective, arguing that the value of such initiatives should be evaluated primarily on whether they achieve their stated missions, rather than on expectations of automatic and widespread economic spillovers.
To hear more from Kantor and Whalley on this research, listen to their episode on the American Economic Association's Research Highlights Podcast.
For more about FSU's College of Social Sciences and Public Policy as well as the Department of Economics, visit cosspp.fsu.edu.
