Date on Honors Thesis

Spring 4-29-2026

Major

Economics

Minor

Legal Studies

Examining Committee Member

Dr. Simone Silva, Advisor

Examining Committee Member

Dr. Beau Sauley, Committee Member

Examining Committee Member

Dr. Eran Guse, Committee Member

Abstract/Description

Aerospace technology is a long-standing field of innovation, yet it has experienced renewed momentum in recent years due to increased public and private investment. This study analyzes how changes in budget allocations to aerospace-related firms and government organizations influence the pace and scope of technological development within the aerospace sector. By examining historical trends in aerospace innovation alongside recent funding initiatives and policy decisions, this research evaluates the relationship between financial investment and technological advancement. This analysis focuses on Hypothesis 1 (H1): that higher aerospace R&D expenditure is positively correlated with innovation output. Using a two-period state-level panel (FY2021 and FY2023) covering all 50 US states and the District of Columbia, this research measures variation in aerospace budgets and technological outcomes over time, yielding a total of N = 102 observations (51 states x 2 periods). The instrument used to address endogeneity is defense R&D contract obligations from the Federal Procurement Data System (FPDS-NG), following Moretti, Steinwender, and Van Reenen (2019). All results were obtained via Instrumental Variable (IV) regression analysis. Results provide directionally consistent but marginally significant support for H1, with NASA direct employment positively associated with state innovation scores across multiple specifications.

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