Measuring Economic Growth from Outer Space

Abstract

GDP growth is often measured poorly for countries and rarely measured at all for cities or subnational regions. We propose a readily available proxy: satellite data on lights at night. We develop a statistical framework that uses lights growth to augment existing income growth measures, under the assumption that measurement error in using observed light as an indicator of income is uncorrelated with measurement error in national income accounts. For countries with good national income accounts data, information on growth of lights is of marginal value in estimating the true growth rate of income, while for countries with the worst national income accounts, the optimal estimate of true income growth is a composite with roughly equal weights. Among poor-data countries, our new estimate of average annual growth differs by as much as 3 percentage points from official data. Lights data also allow for measurement of income growth in sub- and supranational regions. As an application, we examine growth in Sub Saharan African regions over the last 17 years. We find that real incomes in non-coastal areas have grown faster by 1/3 of an annual percentage point than coastal areas; non-malarial areas have grown faster than malarial ones by 1/3 to 2/3 annual percent points; and primate city regions have grown no faster than hinterland areas. Such applications point toward a research program in which “empirical growth” need no longer be synonymous with “national income accounts.”

Climate and the slave trade

“…The density of modern night-time lights -a proxy for economic activity -can be used to identify which effect dominated over the long run. 32 Following Michalopoulos and Papaioannou (2013) and Henderson et al (2012), we use night-time lights as a proxy for modern development. These have the advantage of overcoming the lack of reliable sub-national data on economic activity in sub-Saharan Africa (Jerven, 2013).…”

“…These data are taken from the Defense Meteorological Satellite Program's Operational Linescan System. Henderson et al (2012) provide a particularly 31 Convergence could not be achieved using a negative binomial model.…”

Regional Growth and Regional Decline

“…For some countries, the populations of cities have been used to proxy regional development over centuries; see Acemoglu One approach of particular interest, emerging from an interdisciplinary research effort, has been to use satellite data on light density at night to develop measures of income or population density at the sub-national level. As Chen and Nordhaus (2011) and Henderson et al (2012) emphasize, this is especially attractive for measuring growth in countries where spatially-disaggregated statistics are unreliable or not available. One application would be to map changes in regional income for countries where hard-to-measure activity, like subsistence agriculture or an urban informal sector, is significant.…”

Economic Reforms and Industrial Policy in a Panel of Chinese Cities

“…See also Henderson et al (2012) and Chen and Nordhaus (2011) and the literature cited there on the use of light to measure economic activity. Ma et al (2012) and Hälg (2012) discuss the use of light data for Chinese cities.…”