China has put a lunar explorer on the far side of the moon. A first. The resulting research of course feeds our human curiosity. But how do such “moonshots” benefit the economy?

There are several benefits to the economy of projects like a space program. It employs people, and uses goods and services from other industries. Though, given the broken window fallacy, the expenses might be high to just feed curiosity. The good news is that there are also positive externalities. Mazzucato (2013) shows that government investment in (basic) science leads to “innovation” by companies. Moreover, moonshots improve technology transfer. Technology transfer improves because moonshots train researchers which can then “absorb” other technologies more easily.

For policy this means that moonshot projects, as a country or company, have very significant long term benefits. Future innovation and absorption capacity are very valuable assets. On the other hand, the present is important too. For policymakers this means, moonshots should be balanced against present needs and not be discounted too much.