In this report, we discuss the notion of value creation in space and the way it has been measured in recent years. We expose the limitations of the current framework for measuring the contribution of the public sector by academic literature and the European Space Agency (ESA), and examine the implications in terms of ESA's remits.

We argue that the public space agencies have had a proactive role and not a reactive one in the innovation process, which has triggered important transformational changes. We argue in favour of a theory of economic change that focuses on a dynamic efficiency framework. This framework also emphasises the distinction between incremental innovation, which implies continuous change, and radical innovation, which leads to transformational and unpredictable change. Economic changes also imply the presence of fundamental uncertainty about the effects of public interventions, which means that the predictions of ex-ante outcomes have to be interpreted with caution. We also argue that the sustainability of the system and the vitality of the innovation process require a proper allocation and distribution of resources within the private sector but also between the public and private sector and within the public sector. In other words, the state needs sustainable resources to drive change. As a result, the theory of resource allocation is not to be separate from the theory of economic change (i.e., the formation of the economy).