We seem to be making a bit of a mess of running the economy on planet earth. Can we do any better in space? The final frontier was once the exclusive playground of the superpowers’ military-industrial complexes, as the cold war played out above our heads. But space has rapidly been globalised and democratised, opening up to other countries and private sector companies. Some 40 governments spent a total of $64bn on space activities in 2013, led by the US, China, Russia and India, according to the latest figures from the OECD. A new generation of space entrepreneurs, including Elon Musk and Jeff Bezos, has also emerged, promising to transform the economics of space travel. More than 50 satellite telecommunications operators supply an increasingly fast-changing market. Rupert Pearce, chief executive of Inmarsat, one of the biggest of those operators, says the satellite industry is being transformed. “We have seen an incredible step change in the pace of innovation,” he says. “We are living in a world of pervasive connectivity.” Thanks to the data revolution the demand for satellite communications is expanding fast. The number of connected devices is forecast to rise from 5bn to 20bn over the next five years as the “internet of things” becomes a reality. Driverless cars could create a surge in demand for geolocation services. The supply side of the industry is evolving just as fast as satellites become smaller, cheaper and more sophisticated. One company taking advantage of the opportunities is Planet, a US start-up that is putting swarms of small satellites into space with cameras to provide near-constant images of earth, helping environmentalists monitor deforestation or fund managers track crop yields. “We are getting to the point in the global sensing revolution where we can access real-time image data,” says Robbie Schingler, Planet’s co-founder. These “downstream” activities, largely run by the private sector, are flourishing pretty much by themselves. But things are more complex “upstream”, which is still mostly the preserve of national and international institutions. Who should regulate and manage this extraterrestrial resource? How will we finance infrastructure such as the International Space Station, which cost about $100bn to develop? Who has the right to profit from – or tax – asteroid mining? To stimulate fresh thinking, Nasa challenged economists, including the Nobel Prize-winning Eric Maskin and Mariana Mazzucato, to examine the economic development of low earth orbit, or “commercial space”. Their suggestions were published this month. The critical question is how the public sector best interacts with the private sector. In 2011, Nasa set up the Center for the Advancement of Science in Space to encourage public institutions and commercial enterprises to use the ISS as a platform for innovation. The economists have several good ideas for this. Comprehensive databases could be created to record space research. Smarter insurance could help entice thinly capitalised start-up companies. Biotech firms could be incentivised to exploit a microgravity environment. But based on most of the contributions to Nasa, it looks as if the space economy will end up pretty much like the one on earth, where the cash-strapped public sector remains in thrall to the private sector. The worry is that the infrastructure costs will be socialised while the profits are privatised. That would be a shame. Given its extraordinary history of accomplishment, Nasa is one public sector institution that should be allowed to dream big and given funding for its research efforts. It would be in keeping with the spirit of space exploration to experiment with far bolder economic designs.