How Much Should We Trust the Dictator's GDP Growth Estimates?
69 Pages Posted: 27 Dec 2017 Last revised: 4 Feb 2019
Date Written: February 1, 2019
I study the manipulation of GDP growth statistics in non-democracies by comparing the self-reported GDP figures to the nighttime lights recorded by satellites from outer space. I show that the night-lights elasticity of GDP is systematically larger in more authoritarian regimes. This autocracy gradient in the elasticity is not explained by potential differences in a large set of factors, including economic structure and levels of development, across countries with different forms of government. The gradient is larger when countries have a stronger incentive to exaggerate economic performance or when the institutions that constrain the manipulation of official statistics are weaker. I estimate that the most authoritarian regimes inflate yearly GDP growth rates on average by a factor of 1.15-1.3 and show that correcting for data manipulation provides a more nuanced view on the economic success of non-democracies in recent years.
Keywords: GDP, nighttime lights, economic growth, democracy, data manipulation
JEL Classification: C82, D73, E01, H11, O47
Suggested Citation: Suggested Citation