Measuring economic growth from outer space

Vernon Henderson, Brown University
Adam Storeygard, Brown University
David N. Weil, Brown University

We propose a simple model that allows us to consider satellite data on lights at night as a proxy for local economic activity, distinguishing between population density and consumption per person. The model is tested on a 12-year panel of countries, as well as a panel of subnational administrative units in Guatemala. To our knowledge this is the first global analysis using panel night lights data (1992-2003). We find that changes in lights explain a substantial portion of the variation in changes in consumption. We then apply the lights data to a developing country debate about whether growth in local agricultural activity in a city’s hinterland spurs city growth, as opposed to causality in the opposite direction or no connection. We find for African cities that exogenous productivity shocks in agriculture (years of high rainfall) have a significant and substantial effect on the level of local urban economic activity.