Moonshot: Public R&D and Growth
Shawn Kantor, Alexander Whalley
American Economic Review · 2025 · Volume 115 · Issue 9
Abstract
We estimate the long-term effect of public R&D on growth in manufacturing by analyzing new data from the Cold War-era space race. We develop a novel empirical strategy that leverages US-Soviet rivalry in space technology to isolate windfall R&D spending. Our results demonstrate that public R&D conducted by NASA contractors increased manufacturing value added, employment, and capital accumulation in space-related sectors. While migration responses were important, they were not sufficient to generate a wedge between local and national effects. The iconic moonshot R&D program had only modest economic effects for both the local and national space-related sectors.
Keywords
Investment, Capital, Intangible Capital, Capacity, National Government Expenditures and Related Policies: Infrastructures, Other Public Investment and Capital Stock, Industry Studies: Manufacturing: General, Economic History: Macroeconomics and Monetary Economics, Industrial Structure, Growth, Fluctuations: U.S., Canada: 1913-, Economic History: Government, War, Law, International Relations, and Regulation: U.S., Economic History: Manufacturing and Construction: U.S., Empirical Studies of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence
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