Satellite Based Measures of Regional Economic Growth: Evidence from Ukraine

My Master's Thesis aimed to conduct a comprehensive analysis and assessment of the applicability of satellite-based nighttime light (NTL) data as an indicator of regional economic activity in Ukraine over the period 2004-2021, considering conditions of institutional transition, structural inequality, and armed conflict. Through quantitative econometric research involving panel data analysis of 25 Ukrainian oblasts, combining harmonized DMSP-OLS and VIIRS-DNB satellite imagery with official Gross Regional Product (GRP) statistics from the State Statistics Service of Ukraine, the study explored the relationship between luminosity and economic output across both stable and disruptive periods. The findings of this research highlighted the complexity of measuring regional development in Ukraine, which includes significant core-periphery structures, sectoral heterogeneity, and the methodological challenges posed by the DMSP-VIIRS sensor transition. The best linear specification produced a within-oblast elasticity of NTL radiance to GRP per capita of approximately 0.85 to 0.90, with the NTL proxy showing its strongest correlation with industrial value added and capital investment, and its weakest correlation with agricultural value added. Non-linear specifications provided evidence of concavity in the light-to-output function with identifiable turning points. Key insights from the spatial and econometric analysis revealed that while nighttime lights constitute a valid, though imperfect, proxy for regional economic activity, the Ukrainian regional economy is characterized by a highly skewed structure: Kyiv as the dominant core, an industrial belt across the Dnipro region and pre-2014 Donbas as the second tier, and western and northern agricultural oblasts as the persistent peripheries. The study proposed a methodological framework for counterfactual analysis of the regional economic cost of the 2022 war, including calibrating non-linear elasticities, estimating pre-conflict regional growth trends, and accounting for non-economic factors influencing wartime luminosity such as infrastructure destruction and power blackouts. Overall, my Master's Thesis contributes to the literatures on conflict economics, remote sensing, and regional development, and provides a foundation for future assessments of post-war reconstruction efforts in Ukraine, balancing rigorous econometric measurement with honest acknowledgement of the limits of satellite-based inference.