Stephen Foley: The new space race can give desert state economic lift-off

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The Independent Online

US Outlook: It is approaching truth or consequences time for space tourism.

Sir Richard Branson's Virgin Galactic has some big milestones coming up in its effort to put paying passengers into zero-gravity, and a host of rivals are also stepping up their experimental work. But while it is too early to say who might succeed – and who might fail – in this modern-day space race, I would put my chips on one economic winner in particular: the state of New Mexico.

The desert state is one of the poorest in the union. Around one in five New Mexicans lives below the poverty line, but the government in Santa Fe is gambling big on space, and with the open spaces and clear skies of its desert in its favour, it increasingly appears to have been the right bet. The partnership between business, government and now local academics, too, is turning New Mexico into the space state. Its desert is home to Spaceport America, where Virgin will be headquartered and from where it plans to carry out the first powered flight of the VSS Enterprise in the next few months. State subsidies of up to $300m (£200m) are going into the Spaceport, which is no small sum, but the risk that it has helped build a white elephant is declining.

The Texan company Armadillo Aerospace, set up by the computer games millionaire John Carmack, announced this week that it would be conducting future Nasa-funded tests of its vertical take-off-and- landing craft from Spaceport America. And New Mexico State University in nearby Las Cruces is the home of a new federally funded "centre of excellence" in related research.

The Federal Aviation Authority (FAA), which is putting up half of the money, is really getting serious about space. It wants academic research in areas such as space law, insurance, regulation, air-traffic control and safety, so that it can craft regulation of this nascent industry that ensures passengers know what they are getting into, that spacecraft get back safely, that no one on the ground gets hurt, and also that red tape doesn't strangle a profitable industry at birth.

Mountainous tasks, all of them, and I wouldn't succumb to the optimism of the companies working on space tourism ventures that they will soon be flying paying passengers. Virgin had a mishap last month, when the undercarriage of its launch vehicle – the one that carries the Enterprise halfway to space, before the pair separate – broke on landing, a reminder that not everything will always go according to plan.

There are predictions that Spaceport America could be employing 2,300 people in five years' time, and twice that within a decade. Maybe. As the experimenting gets more serious, New Mexico will certainly be one of the go-to places for budding space entrepreneurs, and if the industry gets over its scientific hurdles – well, then, not even the sky is the limit.

It is a bold experiment in government as venture capitalism. And since new hi-tech industry is what will ultimately pull the US out of its economic malaise, it is to be hoped other states follow New Mexico's lead in harnessing whatever natural and human resources give them their edge.

Spaceport America's nearest town is called Truth or Consequences. Really, it is. The little New Mexico town took the name in 1950 when the makers of a radio quiz show said they would broadcast from the first place to rename itself after the programme. With so much at stake, the name could not be more appropriate.