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Authoritarian regimes are significantly overstating their GDP (gross domestic product) growth, according to new research that uses satellite images of countries at night as a proxy for economic activity.

The report estimates that autocracies exaggerate yearly GDP growth by about 35% relative to democracies.

Rosier picture

The research starts from a central premise: that all leaders, whether in democracies or dictatorships, want to boast of a booming economy.

“Everyone would always want to paint a rosier picture,” report author Luis Martinez of the University of Chicago told VOA. “The crucial difference is that in a democracy you have a whole network of checks and balances that restrains this behavior somewhat.

“For instance, you have the media scrutinizing the numbers. You have the opposition in the legislature also asking questions. Nowadays, in many settings we have freedom of information requests. The underlying hypothesis is that when we start looking at undemocratic regimes, these checks and balances start to become largely absent,” Martinez told VOA.

Night lights

So how to measure economic growth when you can’t trust the government numbers? Research indicates that satellite images showing the intensity of electric lights at night are a close proxy for economic activity.

A common example is the nighttime satellite view of the Korean peninsula. Much of South Korea, a democracy, is lit up brightly. North Korea – whose economy under dictator Kim Jong-un is around 60 times smaller than that of its southern neighbor – is mostly black, the frontier clearly visible by the change in luminosity.

“As an economy develops, things get built, like infrastructure, streetlights, homes, industries,” Martinez said.

Martinez used the “Freedom in the World” index produced by the non-governmental organization Freedom House as a measure of a nation’s democracy. He then compared official GDP figures to the economic growth implied by the satellite images of nighttime luminosity.

“What I find is that, say, you take two countries and in these two countries the nighttime lights grow by the same amount. And it happens that one of them is more democratic than the other. It turns out that that same amount of growth in lights translates into lower reported GDP growth in the more democratic country,” Martinez said.

Economic exaggeration

His study observed GDP figures and satellite data for 184 countries over 20 years, up to 2013.

The research looked at whether the type of economic activity taking place, such as agriculture or hydrocarbon extraction, would impact the intensity of nighttime lights. Martinez also investigated whether poorer data collection and reporting in autocracies could skew the results.

Even controlling for such factors, Martinez said the pattern was clear: Dictatorships overstate their GDP growth.

“When we compare the more stable, credible democracies to the more authoritarian regimes, we’re talking about something in the range of 30% to 35%. What that means for instance, is that if the true growth rate is 1%, the authoritarian regime will report the growth rate of 1.3%,” Martinez told VOA.

Foreign aid

Martinez said foreign aid programs also appear to influence a country’s willingness to overstate its GDP, according to his satellite analysis.

“Many of the poorest countries in the world receive a lot of foreign aid. But once they reach a certain level of income – once they become rich enough – they graduate out of that program, they become ineligible.

“And so of course you can imagine that when you have a lot of money coming in because the country’s relatively poor, you don’t have a strong incentive to overstate growth, and to say that you’re doing really well. So indeed I find that it’s only once poor countries graduate and become ineligible for foreign aid, that these (patterns) start to appear,” Martinez told VOA.

China

China’s authoritarian leader Xi Jinping was sworn in for another five-year term last week. Martinez’s model suggests Beijing may have overstated GDP growth by a third over the past two decades, making its economy far smaller than claimed.

A report published by the Brookings Institution in 2019 suggested that China had been overstating its economic growth by about 2% every year, making its economy 12% smaller than official figures then claimed.

China denies manipulating economic data.

Beijing delayed the release of its 2022 third quarter growth figures without explanation, coinciding with the Communist Party congress. The figures were eventually released in late October, claiming year-on-year quarterly growth of 3.9%, exceeding analysts’ forecasts.
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Thousands of demonstrators defied an official ban to march Saturday against the deployment of new water storage infrastructure for agricultural irrigation in western France, some clashing with police.

Clashes between paramilitary gendarmes and demonstrators erupted with Interior Minister Gerald Darmanin reporting that 61 officers had been hurt, 22 seriously.

“Bassines Non Merci,” which organized the protest, said around 30 demonstrators had been injured. Of them, 10 had to seek medical treatment and three were hospitalized.

The group brings together environmental associations, trade unions and anti-capitalist groups against what it claims is a “water grab” by the “agro-industry” in western France.

Local officials said six people were arrested during the protest and that 4,000 people had turned up for the banned demonstration. Organizers put the turnout at 7,000.

The deployment of giant water “basins” is underway in the village of Sainte-Soline, in the Deux-Sevres department, to irrigate crops, which opponents claim distorts access to water amid drought conditions.

Around 1,500 police were deployed, according to the prefect of the Deux-Sevres department Emmanuelle Dubee.

Dubee said Friday she had wanted to limit possible “acts of violence,” referring to the clashes between demonstrators and security forces that marred a previous rally in March. 

The Sainte-Soline water reserve is the second of 16 such installations, part of a project developed by a group of 400 farmers organized in a water cooperative to significantly reduce water usage in the summer.

The open-air craters, covered with a plastic tarpaulin, are filled by pumping water from surface groundwater in winter and can store up to 650,000 square meters of water. 

This water is used for irrigation in summer, when rainfall is scarcer. 

Opponents claim the “mega-basins” are wrongly reserved for large export-oriented grain farms and deprive the community of access to essential resources.
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Heat waves, intensified by climate change, have cost the global economy trillions of dollars in the past 30 years, a study published Friday found, with poor countries paying the steepest price.

And those lopsided economic effects contribute to widening inequalities around the world, according to the research. 

“The cost of extreme heat from climate change so far has been disproportionately borne by the countries and regions least culpable for global warming,” Dartmouth College professor Justin Mankin, one of the authors of the study published in the journal Science Advances, told AFP. “And that’s an insane tragedy.”

“Climate change is playing out on a landscape of economic inequality, and it is acting to amplify that inequality,” he said.

Periods of extreme heat cost the global economy about $16 trillion between 1992 and 2013, the study calculated. 

But while the richest countries have lost about 1.5% of their annual per capita GDPs dealing with heat waves, poorer countries have lost about 6.7% of their annual per capita GDPs. 

The reason for that disparity is simple: poor countries are often situated closer to the tropics, where temperatures are warmer anyway. During heat waves, they become even hotter.

The study comes just days ahead of the start of the COP27 climate summit in Egypt, where the question of compensation for countries that are disproportionately vulnerable to but least responsible for climate change is expected to be one of the key topics. 

The costs of heat waves come from several factors: effects on agriculture, strains on health systems, less productive workforces and physical damage to infrastructure, such as melting roads. 

Study researchers examined five days of weather considered extreme for a specific region each year. 

“The general idea is to use variation in extreme heat, which is effectively randomly assigned to all these economic regions and see the extent to which that accounts for variation in economic growth” in a given region, Mankin explained. 

“Then the second part is to say, ‘OK, how has human-caused warming influenced extreme heat?'” he added.

Despite these calculations, the study results almost certainly underestimate the true cost of extreme heat, according to the paper — only studying five days per year does not reflect the increased frequency of such heat events, and not all potential costs were included. 

Previous studies on the subject had focused on the costs of heat to specific sectors, though scientists say it is important to look at the price tag of climate change wholistically. 

“You want to know what those costs are, so that you have a frame of reference against which to compare the cost of action,” Mankin said, such as establishing cooling centers or installing air conditioners, versus “the cost of inaction.”

“The dividends economically of responding to the five hottest days of the year could be quite great,” he said.

But according to Mankin, the most important response is to reduce carbon emissions to slow global warming at the source. 

“We need to adapt to the climate we have now, and we also need to deeply invest in mitigation,” he said.
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