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 beused as an alternative measure of GDP in 49 African countries. For thisto be proven true, evidence of significant relationships between night lightdata and GDP time series variables needs to be confirmed through empiricalanalysis. In differing from previous studies, we employ pooled meangroup (PMG) cross sectional cointegration estimators and wavelet coherencetools to examine the cointegration relationships and time-frequencysynchronizations between GDP and DMSP-OLS night light intensity forannual data collected between 1992 and 2012. All in all, we find little evidenceof significant relationships between nighttime data and GDP for individualAfrican countries and therefore caution policymakers in strictlyusing DMSP-OLS data to create synthetic measures of economic growth.Possible avenues for future research are further recommended at the endof the study.