Can Medium-Resolution Satellite Imagery Measure Economic Activity at Small Geographies? Evidence from Landsat in Vietnam

This study explores the potential and the limits of medium-resolution satellite data as a proxy for economic activity at small geographic units. Using a commune-level dataset from Vietnam, it compares the performance of commonly used nightlight data and higher resolution Landsat imagery, which measures daytime light reflection. The analysis suggests that Landsat outperforms nighttime lights at predicting enterprise counts, employment, and expenditure in simple regression models. A parsimonious combination of the first two moments of the Landsat spectral bands can explain a reasonable share of the variation in economic activity in the cross-section. There is, however, poor prediction power of either satellite measure for changes over time.