By EurekAlert
Friday, September 4, 2009
PROVIDENCE, R.I. [Brown University] - Outer space offers a new
perspective for measuring economic growth, according to new
research by three Brown University economists. In a National Bureau
of Economic Research working paper, J. Vernon Henderson, Adam
Storeygard, and David N. Weil suggest a new framework for
estimating a country or region's gross domestic product (GDP) by
using satellite images of the area's nighttime lights.
Reliable data on economic growth is hard to come by in many
parts of the world - particularly in sub-Saharan Africa and other
developing countries - and the data is often not calculated at all
for cities. The authors cite the Penn World Tables, one of the
standard compilations of data on income, which rank countries with
grades A through D by the quality of their GDP and price data.
While almost all industrialized countries receive a grade of A,
nearly all sub-Saharan African countries get a grade of C or D,
which is interpreted as roughly 30 or 40 percent margin of error.
Several countries do not appear in the table, including Iraq,
Myanmar, Somalia, and Liberia.
To improve these estimates, Henderson, Storeygard, and Weil
suggest combining measured income data with the changes observed in
a country's "night lights" as seen from outer space. Using U.S. Air
Force weather satellite picture composites, they look at changes in
a region's light density over a 10-year period. "Consumption of
nearly all goods in the evening requires lights," they write. "As
income rises, so does light usage per person, in both consumption
activities and many investment activities."
When the researchers applied the new methodology to countries
with low-quality national income data, the new estimates were
significantly different. For example, in the Democratic Republic of
Congo, lights suggest a 2.4-percent annual growth rate in GDP,
while official estimates suggest a negative 2.6-percent growth over
the same time period. The Congo appears to be growing faster than
official estimates suggest. At the other end, Myanmar has an
official growth rate of 8.6 percent a year, but the lights data
imply only a 3.4-percent annual growth rate.
Henderson, Storeygard, and Weil say they don't envision the
lights density data as a replacement for official numbers, but when
added to existing data from agencies like the World Bank, the
lights density can provide a better indicator of how these
economies really are performing.
"Our hope is that people start using this, either when they
don't have actual data on economic growth ... or when the numbers
are pretty bad," said Henderson, professor of economics. "This is
just a way to get better estimates."
The second portion of the paper establishes the first known
causal relationship between local agriculture productivity and an
increase in city incomes. The authors examined 541 cities in 18
African countries over a period of nine years, using rainfall as a
way to measure "productivity shocks" to the rural areas. The
authors conclude that an increase in agricultural output does in
fact have substantial effects on local urban economic activity.
Storeygard, a fourth-year graduate student, added that the
research was a true collaboration. Weil has written widely on
various aspects of economic growth, while Henderson is interested
in how to measure growth at a regional or subnational level.
Storeygard has experience using geographic and satellite data.
"It's the kind of paper that used all three of our areas," said
Storeygard. "I don't think any two of us would have been able to do
this in quite the same way."
SOURCE