How Much Should We Trust the Dictator's GDP Growth Estimates?

86 Pages Posted: 27 Dec 2017 Last revised: 7 Jul 2021

See all articles by Luis R. Martinez

Luis R. Martinez

University of Chicago - Harris School of Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: August 9, 2019

Abstract

I study the overstatement of GDP growth in autocratic regimes by comparing the self-reported GDP figures to the night time lights (NTL) recorded by satellites from outer space. I show that the NTL elasticity of GDP is systematically larger in more authoritarian regimes. This autocracy gradient in the elasticity is robust to multiple changes in data sources, econometric specification or sample composition and is not explained by potential differences in a large set of country characteristics. The gradient is larger when the incentive to exaggerate economic growth is stronger or when the constraints on such exaggeration are weaker. The results suggest that autocracies overstate yearly GDP growth by as much as 35%. Adjusting the GDP data for the manipulation taking place in autocracies leads to a more nuanced view on the economic success of non-democracies in recent decades and affects our understanding of the effect of changes to foreign aid inflows on income per capita.

Keywords: GDP, nighttime lights, economic growth, democracy

JEL Classification: C82, D73, E01, H11, O47

Suggested Citation

Martinez, Luis, How Much Should We Trust the Dictator's GDP Growth Estimates? (August 9, 2019). Available at SSRN: https://ssrn.com/abstract=3093296 or http://dx.doi.org/10.2139/ssrn.3093296

Luis Martinez (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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