Bright Lights, Rich City?

The world’s cities shine brightly.

Photo: Cexin Ding. Source: Unsplash.

There’s an iconic photo of North Korea, taken five years ago by the crew of the International Space Station. It dramatically illustrates the relative economic activity of North Korea compared with neighboring South Korea and China. In the photo, North Korea is almost completely dark. It’s impossible to tell where its coast lies. In fact, South Korea looks like a separate land, cut off by an arm of the Yellow Sea from China. The North’s capital, Pyongyang, looks like a small island, despite a population of more than three million.

Source: NASA.

By contrast, the city of Seoul is brightly lit. In fact, its light saturates the photo. There are more than 25 million people there, and they consume, on average, over 10,000 kilowatt hours per year. North Korea residents consume about 700.

When the armistice between North and South Korea was signed in 1953, the countries had suffered similar levels of economic devastation. Now, the economy in South Korea produces approximately $1.6 trillion, and it’s the 11th largest in the world. North Korea’s GDP is estimated at $32 billion – slightly smaller than Vermont’s, and poorer, per person, than any other country.

The difference isn’t just visible in close-up photos. Composite photos of the entire globe give a clear indication of economic activity.

Source: NASA

The eastern half of the US, England, Germany, northern India, and coastal China stand out, along with Japan and South Korea. North Korea is missing here. Also, the interiors of Africa, South America, and Central Asia appear quite dark.

The relationship between the economy and light isn’t a straight line. If fact, after societies have a certain level of wealth, other issues tend to dominate: the nature of the culture, gas flaring at oil wells, legal restrictions on nighttime lighting, and so on. Post-industrial societies don’t depend as much on lighting. Also, it’s hard to study nighttime lights in countries at high latitudes, like Norway and Sweden. It simply doesn’t get very dark in the summer up there. But for low and middle income countries, access to electricity is a key factor in economic development. A recent IMF study demonstrated this connection.

Source: Hu and Yao, IMF Working Paper, April 2019.

For developing countries around the world, the road to economic growth is paved with access to electric power. Electricity is required for almost every aspect of modern life, from sanitation to cell phones to emergency services. If we could do only one thing to improve the lives of the poorest, we just might say, “Let there be light!”

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2019-10-02T07:37:56-04:00September 16th, 2019|Global Market Update|Comments Off on Bright Lights, Rich City?

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