Are governments still reaching for the stars? A look at civil space R&D

From tracking wildfires to enabling climate forecasts and global communications, space technology quietly powers much of modern life. Yet, behind the impressive satellite launches and growing commercial activity lies a more uncertain story: government budgets for civil space R&D are becoming increasingly volatile. While some countries are ramping up investments, others are pulling back. With mounting global challenges, the future of public support for space innovation is at a crossroads.

Government funding for civil space research supports a wide range of activities critical to society. These include space and earth science, natural disaster and climate monitoring, satellite and launcher development and applications that rely on space data and signals.  Some programmes also contribute to dual-use activities with both civil and military applications.

Beyond scientific discovery, civil space R&D underpins complex innovation ecosystems that link national agencies, international bodies, universities and businesses. For example, the European Space Agency and EU research programmes play a key role in pooling and co-ordinating R&D activities and resources.

Importantly, government investments also help bridge funding gaps for private firms. High R&D costs, long lead times, and small market sizes can make it difficult for companies to secure private investment. While venture capital has become more common in the space sector, it benefits only a very small group of actors. Public funding remains essential to sustain innovation and competitiveness in the space sector.

The latest OECD data reveal diverging national trends in public space R&D budgets. In 2023, civil space government budget allocations for R&D (GBARD) in the OECD area made up 6.1% of total civil GBARD. EU27 and the United States each allocated about 0.04% of GDP to civil space R&D.

However, the growth trajectory has been uneven. Between 2008 and 2023, overall growth in civil space GBARD slowed across the OECD. This was mainly due to negative growth in the United States, where civil space R&D budgets fell both in absolute terms and as a share of GDP. The US share of OECD civil space GBARD fell from 57.5% to 38% over the period. The 2026 US federal budget proposal includes further reductions in space and earth science funding.

In contrast, several countries have increased investments significantly. Japan, Korea, France and Italy all recorded above-average growth in civil space GBARD between 2008 and 2023. France and Italy for instance, allotted additional EUR 1.5 billion and 1 billion funding packages to support space activities through 2026. Japan has committed some USD 6 billion over the next decade via its new Space Strategy Fund.

Other European countries, including Luxembourg, Hungary and Spain, also increased their share of civil space R&D within overall government research budgets, often in connection with the expansion of national programmes or deeper integration with the European Space Agency (nine countries joined over the period). Since 2008, at least ten OECD countries have launched or expanded national space agencies, signalling greater interest in space.

One of the most striking findings in the data is the high year-to-year fluctuations in government budgeted spending on civil space R&D. This volatility is driven by a combination of factors.

Changes in government and shifting national priorities can lead to funding changes, especially when civil space R&D is spread across multiple ministries. Project-specific funding cycles can also result in peaks and troughs.

Economic conditions can play a role too. During periods of fiscal constraint, space budgets can face cuts, especially in countries where space may not be seen as a core national priority. Conversely, some nations may increase space investment as part of stimulus efforts or broader economic development plans.

Finally, some of these fluctuations may be down to countries’ reporting practices for space R&D. Space is evolving from being an explicit goal to a means towards other ends, which can make it more difficult to track in government budgets.

While space R&D is often supported during economic downturns as a counter-cyclical support measure, structural headwinds may slow future growth.

Budgetary constraints are intensifying. Many OECD governments are tightening public spending and civil R&D is increasingly supported via tax incentives rather than direct funding. There have been repeated budget cuts in the United States and in Europe the COVID-19 recovery funds are set to complete around 2026-27.

At the same time, defence-related GBARD is growing more quickly than civil GBARD. For example, the UK 2021 Defence Space Strategy announced an additional investment of GBP 1.4 billion over the following ten years. As the strategic importance of space increases (e.g. missile defence, military navigation and communications systems), there is a risk that civil space programmes could lose out.

Moreover, governments face rising pressures to invest in research areas such as health, energy and the environment. Meanwhile, the returns of space R&D often take a long time to materialise and can be difficult to quantify, despite a multiplication of efforts in recent years.

Finally, compared with other civil socio-economic objectives, the share of space R&D in total civil GBARD has been declining at the OECD level since the early 1990s.

Unless these trends are addressed, it could limit the sector’s capacity to deliver on its full potential at a time when global reliance on space-based systems is only increasing.

Despite these challenges, there are clear ways forward. Strengthening international co-operation through frameworks like the European Space Agency and joint programmes can help pool resources, align objectives and create more resilient funding pathways.

Public-private partnerships also have an essential role to play. By sharing risk and mobilising private capital, such partnerships can extend the impact of government funding and spur innovation in emerging space technologies and applications.

Finally, governments should take a fresh and critical look at the effectiveness of existing government support measures. More transparent and stable funding instruments will not only benefit public research institutions but also grow confidence among private investors.

Civil space R&D immediate benefits are often intangible but deeply significant, contributing to improved government services, technological and economic development. Ensuring a consistent and well-directed investment strategy is not only a matter of advancing science, but also of equipping societies to meet growing challenges.

The OECD Space Forum is a unique platform that brings together stakeholders from the global space community and beyond to exchange on economic issues concerning space activities. Its work contributes to improving measurement of the space economy and its broader impacts supporting decision-makers.

The data on civil space R&D presented here are based on the OECD/Eurostat survey on R&D statistics, which tracks government budget allocations for R&D (GBARD) across a range of socio-economic objectives, including civil space exploration and exploitation. Data are presented as a share of total civil GBARD and in purchasing power parities (USD PPP) to allow for international comparisons. The definition of government budget allocations for R&D and guidance on how to compile it can be found in the OECD Frascati Manual. Data for 2024 will be released in September 2025.