Satellite Images Seen as Helpful Gauge of War-Torn Economies

(Bloomberg) -- Countries disrupted by conflict and political instability often underestimate economic downturns as well as the strength of subsequent recoveries, according to new International Monetary Fund research based on nighttime light levels captured by satellite imagery.

Jiaxiong Yao, an economist at the IMF, presented those findings Tuesday in Washington, where policy makers are gathering for the fund’s Spring Meetings.

“Night lights are more useful, or very useful for low-income countries where the statistical capacity is relatively weak and GDP numbers are a bit uncertain,” Yao said, boiling down his conclusions to a simple statement: “In regions where conflicts increased, nights became darker. In regions where conflicts subsided, nights became brighter.”

When years of conflict damaged the Democratic Republic of the Congo’s economy in the 1990s, the alternative data show its performance was worse than reported by official measures, while the stabilization following the arrival of United Nations peacekeepers was actually better, Yao found in an April working paper with Yingyao Hu of Johns Hopkins University.

They saw similar trends in Djibouti, where the economy suffered from 1990s conflicts, and the new measures suggest gross domestic product per capita was higher than reported in the recovery. The same was true around Sierra Leone’s civil war and political instability in Kenya.

“It is likely that periods of economic disruption made it difficult to track the economy accurately and the emergence of the informal economy in subsequent restoration did not enter national accounts,” Hu and Yao wrote.

The findings add to the growing pile of research on alternative data sources, including other publications probing what signals night lights offer economists. World Bank economists, for example, have use night light measurements to better gauge economic activity in South Asia, focusing on a 2015 earthquake in Nepal, India’s demonetization and conflict in Afghanistan.

To contact Bloomberg News staff for this story: Miao Han in Washington at mhan22@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Jeff Kearns, Brendan Murray

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With assistance from Bloomberg