China, Russia and other authoritarian countries inflate their official GDP figures by anywhere from 15 to 30 percent in a given year, according to a new analysis of a quarter-century of satellite data.
The working paper, by Luis R. Martinez of the University of Chicago, also found that authoritarian regimes are especially likely to artificially boost their gross domestic product numbers in the years before elections, and that the differences in GDP reporting between authoritarian and non-authoritarian countries can’t be explained by structural factors, such as urbanization, composition of the economy or access to electricity.
Martinez’s findings are derived from a novel data source: satellite imagery that tracks changes in the level of nighttime lighting within and between countries over time.
George Orwell once said that “if liberty means anything at all, it means the right to tell people what they do not want to hear,” a quote that Martinez says “summarizes the spirit” of his project.
“The key question that the paper tries to tackle is whether the checks and balances provided by democracy are able to constrain governments’ desire to manipulate information or, more specifically, their desire to exaggerate how well the economy is doing,” Martinez said via email. “The way I try to answer the question above is by comparing GDP (a self-reported indicator, prone to manipulation) and nighttime lights (recorded by satellites from outer space and much harder to manipulate) as measures of economic activity.”