Remote sensing the lie : corruption and economic data distortion

Abstract

This paper investigates how corruption contributes to economic data overstatement by comparing officially reported GDP figures with satellite-recorded nighttime light intensity in post-Communist countries, where national accounts have historically been vulnerable to strategic misreporting. Using harmonized nighttime light data from 1996 to 2020 as an external and objective proxy for economic activity, we apply fixed-effects panel estimations to quantify discrepancies between reported and observed performance. The results show that corruption is associated with significant overstatement in official GDP statistics. A one–standard deviation improvement in control of corruption reduces the gap between the two measures by 32% on average, indicating that more effective corruption control is associated with closer alignment between reported GDP and satellite-based measures. This discrepancy is especially pronounced in non-EU post-Communist countries, while EU member states show little evidence of systematic divergence between reported GDP and nightlight-based measures. These findings highlight the importance of institutional quality in limiting both corruption and data distortion and demonstrate the usefulness of satellite-based indicators for assessing economic performance in low-transparency environments. © 2026 The Authors