Economic impacts of technology

Abstract

submitted for AIAA Space 2000 Conference, Space Economics Track, Economics & Technology. At a time when the stock market provides excellent returns to shareholders, it has become more challenging to direct investments into technologies that are high risk and have the potential of a long term high payoff. Even though venture capitalists and business angels invest a phenomenal amount of dollars into high tech startups, they are generally not investing in today's research that could be tomorrow's backbone/infrastructure of the economy. Likewise Congress, challenged with preserving a balanced federal budget, has identified other expenditures; technology and scientific research do not appear to be high investment priorities. There is a gap here and growing concern about the US technology base in the future and what will sustain our economic growth. Federal Reserve Board Chairman Alan Greenspan stated in his Testimony before Joint Economic Committee (6- 14-99) that Something special has happened to the American economy in recent years... a remarkable run of economic growth that appears to have its roots in ongoing advances in technology. For the past five decades, economists have attempted to demonstrate the value of technology investments and quantify their contribution to national economic growth. Pressures from shareholders and/or Congress have forced numerous programs to undertake major economic assessments and have fostered creativity and interest in this most controversial arena. A return on investment for technology cannot be calculated like an ROI for stockholders. The model is more complicated than that. In the aerospace/aeronautics sector in particular, it is extremely important to consider the output measures, i.e. all the impacts that the technology has on other industry sectors and therefore not to limit the evaluation to private gains only. This technology diffusion provides substantial spillover benefits to an economy as a whole. With a review of the different economic models, illustrated with examples, this paper will demonstrate that the return on technology investments far exceeds the return on physical and human capital investments. A case study for the economic assessment of an aerospace-related project funded by the Advanced Technology Program (NIST / Department of Commerce) will be presented.