Using Nighttime Luminosity as a Proxy for Economic Growth in Africa: Is It a Bright Idea?

Abstract

In this paper, we question whether night light luminosity data can be
used as an alternative measure of GDP in 49 African countries. For this
to be proven true, evidence of significant relationships between night light
data and GDP time series variables needs to be confirmed through empirical
analysis. In differing from previous studies, we employ pooled mean
group (PMG) cross sectional cointegration estimators and wavelet coherence
tools to examine the cointegration relationships and time-frequency
synchronizations between GDP and DMSP-OLS night light intensity for
annual data collected between 1992 and 2012. All in all, we find little evidence
of significant relationships between nighttime data and GDP for individual
African countries and therefore caution policymakers in strictly
using DMSP-OLS data to create synthetic measures of economic growth.
Possible avenues for future research are further recommended at the end
of the study.