A researcher at the University of Chicago has just confirmed what many investors and tech industry employees have long suspected: China, Russia and other large authoritarian governments inflate 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 paper, published by Luis Martinez, an assistant professor of public policy at the school, explains how the differences in GDP between his modeling and the government’s official reporting cannot be explained by subtle differences in methodology
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 received his data from a novel source – albeit one that readers might not bee surprised about given the burgeoning space race between Elon Musk, Jeff Bezos and other billionaire founders: Martinez focused on satellite imagery that tracks changes in the level of nighttime lighting within and between countries over time.
In a rare interview, infamous China watcher Michael Pettis explains that China’s recent figures pertaining to GDP growth – which put the rate of growth at just under 7% – could be off by as much as 3 or 4 percentage points.
Martinez explains his methodology in a video, which can be watched in full here.