The 1.7 Trillion Dollar boost to the Economy.

 Yeah, I shamelessly clipped this off my work email, it ties in with my post yesterday involving GPS. 

Economic benefits from GPS skyrocketed starting 2010, about the same time these Boeing technicians examined a GPS IIF-1 satellite ahead of its launch.

Credit: Boeing

Much lauded for its technological innovation and military importance, GPS remains just as recognized for its outsize economic effects. From location-based services that consumers use on their smartphones for food orders and package deliveries to planning and fertilizing fields of corn or soy, the iconic U.S. satellite system has come to serve as an economic engine all by itself.

GPS has contributed more than $1.7 trillion to the U.S. economy since 1984, and it “has employed hundreds of thousands of people” worldwide, according to Lisa Dyer, executive director of the GPS Innovation Alliance.

• Private-sector industries have experienced considerable growth from the advantages GPS provides
• About 90% of economic benefits have occurred since 2010

Dyer spoke in October as the alliance celebrated the 50th anniversary of GPS. She cited updated figures from a 2019 meta-study by nonprofit research group RTI International, sponsored by the U.S. National Institute of Standards and Technology (NIST).

“From people driving someplace new to multinational corporations coordinating complex logistics networks, hundreds of millions of users rely on GPS every day for navigation and positioning,” the study said. “Its precision-timing capability supports industries as diverse as finance, electricity and telecommunications.”

Almost all of GPS’ current economic value is believed to have materialized starting around 2010, according to researchers. That is when gains in information technologies, miniaturization and commoditization of powerful devices as well as the availability of widespread, robust wireless services started becoming reality. Separate but related phenomena catalyzed an explosion of economic growth, including the transition from analog to digital telecommunications in the consumer world.

“The majority of the benefits were productivity gains and efficiency gains for the American industry,” Alan O’Connor, now senior director at RTI’s Center for Applied Economics and Strategy, said when the study was unveiled. At the time, he was senior director of innovation economics. “They also can be measured in the products and services that were enabled.” He pointed to smartphones and dating apps as ready examples just within his research team.

By industry sector, benefits from GPS have been largest for telecommunications, telematics (e.g., fleet management and logistics) and location-based services such as location features on smartphones and other personal devices. Relative to its total industry size, GPS has been especially transformative for the professional surveying sector, the RTI-NIST report also noted.

GPS underpins a tremendous boost in productivity, requiring less time and effort to achieve similar results. With no viable alternative, researchers estimated GPS provided the surveying industry with $60.4 billion of benefits between 1984 and 2017 and has averaged about $3.4 billion per year since 2010, in today’s dollars.

Nevertheless, telecommunications appear to have benefited the most. Precision timing plays a critical role in synchronization of telecommunications networks, offering service providers greater efficiency in using available spectrums and delivering high-speed wireless services. “Given American society’s intensive use of wireless technologies, it is perhaps not surprising that benefits related to telecommunications are substantial,” the study pointed out.

Other industries, such as finance, leverage GPS because of its reliability and ubiquity, although the precision is far greater than what finance requires, according to the study. Researchers acknowledge that alternatives are, or would have been, readily available for them—yet GPS does play a role in those industries.

GPS also allows for other, albeit indirect, economic benefits. “What is sometimes lost is the real economic benefits relating to GPS,” O’Connor said. “Improved navigation reduces miles driven. We are still realizing the full potential of GPS functionality.”

Other benefits, while expected, have yet to play out; for instance, because of long technology life cycles in some sectors, such as electric utilities, newly installed GPS-enabled equipment might have to coexist with legacy equipment for some time.

GPS is so integral to the U.S. economy that a monthlong GPS outage could cause roughly $38 billion in economic damages, according to updated dollar figures from the study, or about $1.3 billion a day. “If the outage were to occur during the critical planting season, in April and May, and lasted multiple weeks, the impacts could be as much as 50% higher because of the widespread adoption of GPS-enabled precision agriculture technologies by American farmers,” the study stressed.

As with the benefits, damage would likely be amplified for indirect reasons. As noted above, some sectors adopted GPS just because it was simple, convenient and ubiquitous. For example, the maritime sector had both mariners’ skills and the Loran system that provided a two-dimensional positioning signal, but the Loran system was decommissioned in 2010 in favor of GPS.

“This means that although the historical benefits relative to technology alternatives are negligible, the consequences for maritime industries would be significant in the event of an outage, particularly for port operations and the safety of recreational boating,” the study stated.

Major efforts to quantify the economic effects of GPS started 29 years ago. While the RTI-NIST study is not the only effort to catalog the economic benefits of GPS, it is widely cited within related fields as well as in Washington, and it is considered both comprehensive and conservative.

The RTI study measured industries from 1984 to 2017 and values in 2017 dollars, which have been updated for this article. RTI quantified the value of GPS relative to a counterfactual scenario of alternative technologies, if they existed, for each industry in an effort to isolate the effect of GPS. O’Connor and other researchers said they tried to take a conservative approach. Nearly 200 experts in specific GPS applications contributed to the RTI-NIST study over three years.

“An important observation they made from assessing the benefits of GPS is the relationship between science investments, private-sector innovation and time,” Kathleen McTigue, a NIST economist, said after the report was published. “The availability of a reliable, accurate and extremely precise timing signal meant that innovators had one less barrier to their development of the technologies and applications that are pervasive today and that generate the lion’s share of GPS’ economic benefits.”

Another stark takeaway from researchers’ extensive review also still holds true: The economic benefits of GPS likely will keep expanding. “The economic significance of GPS is growing,” the report concluded. “This suggests that the full potential of GPS functionality has yet to be realized.”