Estimating GDP growth using VIIRS night-time light data

Abstract

ABSTRACT The accuracy of GDP per capita growth rate in countries with low statistical capacity has been questioned, which hinders understanding progress of Sustainable Development Goals (SDGs) accurately. This study aims to estimate GDP per capita growth rate in countries with poor statistical quality. To achieve this goal, the study builds an econometric model with processed Visible Infrared Imaging Radiometer (VIIRS) night-time light data and other economic variables and the study further assesses the accuracy of the model by comparing the estimated GDP growth to high-quality economic data from Organization for Economic Co-operation and Development (OECD) countries between 2014 and 2018. First, due to the abnormal fluctuations in the time series generated from yearly composite night-time light images, we propose a trend analysis method for the monthly night-time light data to synthesize a more stable yearly time series. Then, we construct artificially low-quality GDP simulations and combine VIIRS data and official statistics data to construct regression models to correct the simulated GDP. Finally, to assess the model accuracy, we compare its estimates of GDP per capita growth rates to official data from high-quality OECD countries, looking for any deviations. We have two major findings as follows: first, the VIIRS data, which comprise information on human activity, are a valuable resource for estimating GDP growth; second, the GDP estimation model can reduce the artificial bias of the simulated GDP per capita growth rate by using VIIRS night-time light data and the average accuracy of the model with simulated data can reach 89%.