Institutions, Technology, and the Energy Paradox: Path Dependence and Cross-Sectoral Spillovers in Space Development

This study empirically examines the factors shaping countries’ transitions toward indigenous satellite production capability over the 1996–2024 period using a panel dataset of 85 countries. While the institutional infrastructure of the space sector is often treated in the literature as a fixed background condition, empirical evidence on how and under what circumstances countries achieve domestic satellite production remains limited. To address this gap, the analysis models the timing of a country’s first transition to indigenous satellite production, defined as full or partial domestic involvement in satellite development, within a survival analysis framework that accounts for time dependence and censored observations. Parametric and semi-parametric specifications are estimated, with model selection criteria indicating that the Gompertz distribution provides the best fit to the data. The results reveal strong evidence of institutional path dependence, as the presence of a national space agency significantly increases the likelihood of achieving indigenous satellite production capability. Macroeconomic stability, captured by the current account balance, and demographic scale further accelerate this transition, while high-technology exports exhibit a limited positive association. By contrast, alternative and nuclear energy use does not display a statistically significant effect. To assess robustness, the baseline results are complemented with a Cox proportional hazards model and a discrete-time hazard model estimated under a logistic specification, both of which yield qualitatively consistent findings. In addition, Shapley Additive Explanations are employed for interpretability to visualize variable contributions to predicted event probabilities, confirming that accumulated experience over time and institutional capacity dominate the transition to indigenous satellite production, while macroeconomic and technological factors play secondary roles. Overall, the findings suggest that indigenous satellite production emerges primarily through sector-specific institutional accumulation and long-term economic capacity rather than generalized cross-sectoral technological spillovers.