We always talk about economic growth. We worry when there is a growth slowdown. And in times of turbulence there is more skepticism. How real are the figures we are using? Do they really capture what is going on? In developing countries there is a large informal sector and it’s very difficult to capture it through the statistical instruments we typically use. We don’t have data with high frequency most often just annual. We don’t have data about states or provinces or districts that is reliable enough. So what can be done? One promising avenue to improve our understanding of economic
activity comes from new technologies. For example the use of nightlight data from satellite imagery. Look at South Asia: look how it becomes brighter as it grows and this is something we see across countries. Here we measure the intensity of nightlight: The more to the right the brighter. And here the level of economic activity: The more we go up the more economic activity there is. This point is Afghanistan in 1992. A poor country mainly in the dark but then look
as years go by how it becomes both brighter and stronger from an economic
point of view. And it is the same across countries in the region. This kind of data has enormous advantages. Satellite imagery is cheap to obtain. It can be obtained almost in real time, you can get it with monthly frequency, you can get it by the square kilometer and, it’s not subject to any sort of interference in the way it is created. And so in this report, we illustrate how the use of this new technology can improve our measurement and our understanding of economic activity.