Nightlights and Subnational Economic Activity: Estimating Departmental GDP in Paraguay

Gordon Carlos Mccord,Mario Rodriguez-Heredia

doi:10.3390/rs14051150

Abstract

Subnational measures of economic activity are crucial for analyzing inequalities that persist across subnational regions and for tracking progress towards sustainable development within a country. Eighteen of the Sustainable Development Goals (SDG) indicators require having estimates of Gross Domestic Product (GDP), making subnational GDP estimates crucial for local SDG monitoring. However, many countries do not produce official subnational GDP estimates. Using Paraguay as an example, we show how nightlights imagery from the Visible Infrared Imaging Radiometer Suite’s Day-Night Band (VIIRS-DNB) and data from neighboring countries can be used to produce subnational GDP estimates. We first estimate the relationship between VIIRS and economic activity in South American countries at the first subnational administrative level, employing various econometric models. Results suggest that nightlights are strongly predictive of subnational GDP variation in South American countries with available data. We assess various models’ goodness-of-fit using both cross-validation against other countries’ subnational GDP data and comparing predictions against an input–output accounting of Paraguay’s subnational GDP. Finally, we use the preferred model to produce a time series of department-level GDP in Paraguay.

Highlights

Measuring a country’s economic activity, most commonly expressed as Gross Domestic Product (GDP), is crucial for setting fiscal and monetary policy, targeting public investment, and for economic decision-making by firms and international development partners
Goals (SDGs): eighteen of the 231 unique indicators underlying the Sustainable Development Goals (SDG) require estimates of GDP. These indicators span SDGs 1, 7, 8, 9, 10, 11, 12, 14, and 17, and include the use of GDP to estimate economic losses from disasters as well as measuring labor shares and government revenue shares (Table 1). These GDP-based SDG indicators are essential for characterizing the development profile of countries and regions, and they have been employed and studied in recent literature
In addition to measuring progress against international goals, SDG indicators contribute to a research agenda on progress and obstacles to sustainable development across countries

Summary

Introduction

Measuring a country’s economic activity, most commonly expressed as Gross Domestic Product (GDP), is crucial for setting fiscal and monetary policy, targeting public investment, and for economic decision-making by firms and international development partners. Goals (SDGs): eighteen of the 231 unique indicators underlying the SDGs require estimates of GDP. These indicators span SDGs 1, 7, 8, 9, 10, 11, 12, 14, and 17, and include the use of GDP to estimate economic losses from disasters as well as measuring labor shares and government revenue shares (Table 1). These GDP-based SDG indicators are essential for characterizing the development profile of countries and regions, and they have been employed and studied in recent literature. In addition to measuring progress against international goals, SDG indicators contribute to a research agenda on progress and obstacles to sustainable development across countries

Methods

Results

Discussion

Conclusion