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August 3, 2009

Measure economic growth? Take a look from space

Sometimes you get the best picture when you step back and get some perspective. NGOs and governments spend millions of dollars trying to measure gross domestic product and other economic indicators in developing nations with no or rudimentary statistical agencies of their own. Three academics at Brown University have proposed a cool alternative way of gauging growth in Africa and elsewhere: Track changes in night lighting as seen from space.

In this paper we explore the usefulness of a different proxy for economic activity: the amount of light that can be observed from outer space. More particularly, our focus will be on using changes in “night lights” as a measure of economic growth...

Most significantly, night lights data are available at a far greater degree of geographic fineness than is attainable in any standard income and product accounts. As discussed later, we can map data on light observed from space on approximately one-kilometer squares and aggregate them to the city or regional level. This makes the data uniquely suited to spatial analyses of economic activity. Economic analysis of growth and of the impacts of policies and events on cities and regions of many countries is hindered by a complete absence of any regular measure of local economic activity...

Note also that data from satellites are available at a much higher time frequency than standard output measures. Thus they are available well in advance of income measures from national accounts and provide an early signal of country growth changes.

The paper is by J. Vernon Henderson, Adam Storeygard and David N. Weil.

Posted by Jay Hancock at 10:31 AM | | Comments (1)
        

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Locally calibrated to the tree canopy loss per unit of economic activity?

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Wednesdays and Fridays.
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