Behind The Black Postings By Robert Zimmerman

Russia has announced a commitment to spend $70 billion over the next seven years on their aerospace industry.

Russia will spend 2.1 trillion rubles (about $70 billion) under a state program for the development of the national space industry in 2013-2020, Prime Minister Dmitry Medvedev said on Thursday. “The total volume of funding is quite significant: 2.1 trillion rubles, including extrabudgetary sources,” he said. The program is designed to ensure the country retains its position as a leading global space power, while also supporting its defense capability, and boosting economic and social development, Medvedev said.

Though this commitment of significant funds will certainly help revitalize their aerospace industry, I wonder whether it will instead encourage that industry to be less efficient. If done right government subsidies can jumpstart an industry, as seen with NASA’s new commercial space program. If done wrong, however, subsidies can result in an expensive operation that can’t make a profit, as in the case of ESA, Arianespace, and its Ariane 5 rocket.

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