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MEASURING ECONOMIC GROWTH FROM OUTER SPACE.

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  • 1NATIONAL BUREAU OF ECONOMIC RESEARCH, 1050 Massachusetts Avenue, Cambridge, MA 02138.

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Summary
This summary is machine-generated.

Satellite night lights offer a novel proxy for measuring economic growth, especially in data-poor regions. This method improves income growth estimates and enables subnational economic analysis.

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Area of Science:

  • Economics
  • Geospatial Analysis
  • Development Studies

Background:

  • Accurate measurement of economic growth is challenging, particularly for cities and subnational regions.
  • Existing national income accounts often suffer from poor data quality in many countries.

Purpose of the Study:

  • To introduce satellite night lights as a proxy for measuring economic growth.
  • To develop a statistical framework integrating light growth with existing income data.
  • To enable economic growth measurement at subnational levels.

Main Methods:

  • Utilizing satellite data on lights at night as a proxy for economic activity.
  • Developing a statistical framework to augment national income accounts with light growth data.
  • Assuming uncorrelated measurement errors between light data and national income accounts.

Main Results:

  • Satellite light growth provides marginal improvements for countries with good data but significantly enhances estimates for data-poor nations.
  • Estimates for some low-data countries showed discrepancies of up to 3 percentage points in average annual growth compared to official data.
  • Analysis of Sub-Saharan Africa revealed faster growth in non-coastal and non-malarial regions, with no significant difference for primate cities versus hinterlands.

Conclusions:

  • Satellite night lights offer a valuable, readily available tool for improving economic growth measurement, especially where traditional data is scarce.
  • This methodology expands the scope of empirical growth analysis to subnational regions.
  • The findings highlight regional disparities in economic growth within Sub-Saharan Africa.