A new research paper suggests that authoritarian regimes, in countries like China, Russia and North Korea are manipulating their gross domestic product (GDP), perhaps by as much as 15 to 30 percent in any one year.
The paper, written by University of Chicago’s Luis R. Martinez, discovered that GDP is likely to be inflated even more when there is a “stronger incentive” to do so, such as right before elections or following a year of weaker-than-expected growth.
“The gradient is larger when there is a stronger incentive to exaggerate economic performance (years of low growth, before elections or after becoming ineligible for foreign aid) and is only present for GDP sub-components that rely on government information and have low third-party verification,” the study’s abstract reads. “The results indicate that yearly GDP growth rates are inflated by a factor of between 1.15 and 1.3 in the most authoritarian regimes.”
Martinez used satellite imagery that tracks nighttime lights and the level at which they change within countries over time.
In an email to The Washington Post, Martinez said the paper tries to look at whether the checks and balances that democracy is supposed to provide is enough to ” constrain governments’ desire to manipulate information or, more specifically, their desire to exaggerate how well the economy is doing.” – READ MORE