Photo Credit: Shutterstock
Afghanistan has undergone a significant and rapid shift in its economic landscape since 2001. International spending in the security sector stopped, foreign military forces left, and sanctions imposed a drag on economic activity. Indeed, official data indicates a sharp contraction: Afghanistan’s GDP fell by over 20 percent in 2021 and, despite a slight recovery in 2023, remains nearly a quarter smaller than in 2020.
Yet, if we look at satellite data on nighttime lights as a proxy for economic activity, a surprisingly different picture emerges. By stripping out the artificial brightness of military installations that once dominated Afghanistan’s landscape, new analysis offers a view of the civilian economy in the aftermath of the 2021 regime change, revealing a much more resilient economy than official GDP numbers suggest, and where regions outside the traditional economic centers are enjoying a “no-conflict dividend.”
Not all lights shine the same
Nighttime light data has long been used by economists and others as a proxy for economic activity, especially in places where conventional data is scarce or unreliable. The principle is simple: where there is light, some sort of (direct or indirect) economic activity is taking place. This is particularly true for urban centers and industrial hubs, where nightlights reflect bustling markets, factories, and infrastructure.
Our analysis of Afghanistan’s post-2021 economy through nighttime lights takes into account the large role foreign military forces played in shaping the country’s nighttime glow. At the height of international military presence in the years around 2012, bases and military installations accounted for as much as 30 percent of the country’s night lights. These bases not only brought artificial light, they also contributed to local economies through security spending, the acquisition of goods and services, and infrastructure development. However, foreign military bases were set to shut down in late 2021, at a time when they still produced about 18 percent of all lights in the country.
The pre-planned nature of the foreign bases shutdown is important since it implies that 1) Afghanistan's luminosity would have dimmed independently of the political and economic disruptions of 2021, and 2) to understand the evolution of the economy in the country, lights from civilian sources represent a better benchmark.
Figure 1. Military bases were a significant source of light until 2021: Their luminosity rivaled that from nearby cities
Source: Author’s calculation using VIIRS data
Results show that, in fact, in 2022 total lights in Afghanistan dropped by 22.6 percent compared with the previous year. At first glance, this decline seemed to reflect the broader economic collapse predicted by traditional metrics of economic activity. However, upon closer inspection, it becomes clear that much of this dimming was the result of military base closures. After adjusting the data to remove the influence of military lights, luminosity data uncovers a trend where civilian nighttime lights—the lights that reflect local economic activity—experienced a smaller contraction following the 2021 economic dislocation.
Civilian Lights Shine Brighter: Afghanistan is much brighter today than in 2020.
Civilian lights show a country that, as of 2023, is 10.5 percent brighter than it was in 2020. The discrepancy between GDP and nighttime lights is especially stark: while the national accounts point to an economy that remains one-quarter smaller, the growth in civilian luminosity paints a picture of nascent recovery, especially in areas previously most heavily affected by violence.
Figure 2. Military bases shutdown explains two-thirds of the reduction in nighttime lights in 2021: Civilian lights also contracted but have recovered since 2022.
Source: Author estimations using VIIR data.
Nighttime lights are better suited to capture informal economic activity and provide a highly detailed view of where economic activity is happening. They help us understand the reasons behind the economic recovery that are not fully captured in official data sources – the informal sectors and small-scale trade that represents up to 72 percent of the economy (World Bank, 2005; SIGAR, 2018). Moreover, Afghanistan has never produced GDP data other than at the national level; therefore, nighttime lights offer a more granular view of economic activity at the sub-national level.
What’s Driving Recovery?
Civilian nighttime lights reveal a geographic shift in Afghanistan’s economic activity. While Kabul remains the country’s most important economic hub, its share of national luminosity dropped from 31 percent in 2020 to just 26 percent in 2023.
The reduction in active conflict has also played a significant role in the redistribution of economic activity. Civilian lights suggest a “no-conflict dividend,” which is most pronounced in previously contested regions that now have the opportunity to realize part of their economic potential.
Figure 3. Civilian lights indicate new centers of economic activity are developing: This points to areas benefiting from no-conflict dividend.
Source: Author estimations based on VIIRS data. Note: Regions are defined as Central (Kapisa, Logar, Maydanwardag, Panjsher, Parwan); East (Kunarha, Laghman, Nangarhar, Noristan); Kabul (Kabul), North (Balkh, Faryab, Jawzjan, Samangan, Sar-e-Pul); Northeast (Badakhshan, Baghlan, Kunduz, Takhar); South (Ghazni, Khost, Pakteka, Paktya); Southwest (Hilmand, Kandahar, Nemroz, Uruzgan, Zabul); West (Badghes, Farah, Hirat); West-central (Bamyan, Daykundi, Ghor).
Other indicators mirror the positive trend in civilian lights. Trade data show exports have doubled since 2020 while imports have risen by about 25 percent. Meanwhile, signs of recovery also emerge from household survey analysis. Despite the rapid deterioration of welfare in the months that followed the regime change, with 70 percent of the population lacking enough income to satisfy basic needs, evidence shows welfare bounced back to its 2021 levels, with poverty hovering again at around 50 percent [See World Bank, 2023 (AWMS)].
A Call for Better Data
The divergence between official GDP data and nighttime lights highlights the limitations of Afghanistan’s national accounts system. The current GDP estimates are based on an economic structure from 2016, which does not accurately reflect the changes in the economy since 2021. For one, opportunities in the formal sector have decreased while the geographic distribution of economic activity has shifted away from the capital. These two forces have moved economic activity away from the sectors and locations that national accounts are best suited to capture.
Improving the accuracy of Afghanistan’s economic data will require updating the national accounts to better reflect current realities. This includes creating new sampling frames for firms and households, as well as incorporating data from informal sectors and rural areas. Without these updates, the national accounts will continue to underreport economic activity and give an overly pessimistic view of the nature and scale of economic recovery.
What the future holds
This recovery, however, is fragile. The growth in civilian luminosity, the rise of new economic hubs, and the persistence of trade all point to an economy that is finding ways to survive, and even thrive, in the face of immense challenges.
The sustainability of Afghanistan’s economic growth will depend on several factors, including the continuation of trade and gaining access to global markets; the stability of the political and security situation; improvements in human capital, infrastructure and business development; and the future of international aid. Most importantly, Afghanistan’s long-term economic health depends on the ability of women to invest in their human capital and participate in productive and rewarding activity.
As the people of Afghanistan continue to adjust to new political and economic realities, the insights offered by alternative data sources like nighttime lights shed light on new opportunities to support the Afghan people.
Join the Conversation