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. We test it on a 12-year panel of countries, as well as a panel of subnational administrative units in Guatemala and a cross section of units in three southern African countries. To our knowledge, this is the first global analysis using panel night lights data (1992-2003). We find that changes in lights explain a large portion of the variation in changes in consumption. We then apply the lights data to the more substantive question of how local agricultural productivity, as proxied by rainfall, affects urban economic activity, either via urbanization (more people) or increased urban incomes (more activity per person). We find a statistically significant and substantial increase in urban economic activity during and following years of high rainfall.