Investigating the Relationship Between Nighttime Light Emissions and Economic Growth in European NUTS-3 Regions, 2001–2021

Understanding the directionality of the relationship between artificial light at night (ALAN) and economic activity is crucial for evidence-based policymaking aimed at accelerating and sustaining development. In particular, this knowledge may help to ensure that ALAN does not serve just a proxy for economic activity, when information is unavailable, but may also become a meaningful development indicator on its own. However, the question remains about the directionality of the GDP–ALAN relationship: Does an increase in GDP simply leads to more nighttime light emissions, while the reverse link is negligible, or is this relationship two-directional, with ALAN affecting economic development as well. The present study attempts to answer this question by applying the Granger directionality test to time series panel data available for 1300+ EU NUTS-3 regions over the period of 2001–2021. The study aims to determine the directionality of the relationship between GDP and ALAN in European NUTS-3 regions, distinguishing between Western and Eastern Europe and between different measurement eras (DMSP-OLS vs. VIIRS). The analysis reveals a complex and bidirectional relationship that varies in strength. In particular, for the years 2001–2013, the analysis showed that GDP led to more ALAN emissions, while the reverse link was much weaker and negative. However, after 2013, this relationship has become unidirectional, with GDP continuing to lead to more ALAN emissions, but not vice versa. These findings highlight the importance of considering long-term trends when interpreting ALAN emissions as an indicator of economic development, which is widely used in empirical studies at present.