Managing foreign participation in government-funded applied space research and product development

Using the example of the USA, this article examines the economics of foreign participation in applied R&D space projects, with an emphasis on those with the goal of commercializing technology. Following an overview of the arguments within applied high-tech research in general — fear of subsidizing other countries economies and jeopardizing national prestige; benefits from nationally unavailable skills, reducing government costs and increasing domestic incentives for innovation — the authors consider specific characteristics of markets for space technology in the light of these arguments. They conclude with a discussion of policy options, such as the use of licenses or levy of royalties, to preserve the virtues of foreign competition while addressing concerns about ‘underwriting’ foreign competitors.