Estimating the collapse of Afghanistan's economy using nightlights data.

Abstract

The Taliban's takeover of Afghanistan in August 2021 is associated with a rapid collapse of the Afghan economy. However, assessing the scale of this collapse is proving difficult as official data are scarce. To complement qualitative measures obtained through rapid surveys of the population, we employ monthly nightlights data as a proxy measure for changes in economic activity. By combining a synthetic control approach with nightlights data from neighboring countries, our analysis reveals a significant shift in Afghanistan's economic trajectory: from positive growth to a deep recession, even considering the impact of the Covid pandemic. Our estimations suggest that Afghanistan's GDP has declined by approximately 16% from 2020 to 2022, notably less than the World Bank's current survey-based measure of a 28% decline in 2021 alone. In contrast to other available estimates, our reporting includes confidence intervals to convey the uncertainties surrounding these point estimates. This study showcases the potential applicability of our methodology and the use of appropriately processed monthly nightlights data in scenarios where administrative data is limited or unreliable.