Statistical Capacity Matters: The Long-Term Effects of Africa’s Slave Trade on Development Reflected by Nighttime Light Intensity

Empirical research depends on reliable data. Yet, in many countries, statistical agencies do not have the capacity to collect high-quality data on economic development. This is especially the case in Africa, where the capacity to collect such data is affected by the same historical factors that explain economic development—in particular, the slave trade. We hypothesise that the impact of the slave trade on economic development in Africa is biased because cross-country heterogeneity in statistical capacity related to the slave trade creates a non-classical measurement error in gross domestic product (GDP) per capita. Our empirical evidence supports this view. When replacing GDP per capita by nighttime light intensity per capita—an indicator of economic development unrelated to statistical capacity—the impact of the slave trade on economic development drops by a factor of 2–4 depending on model specification and estimation methodology (OLS, IV and high-dimensional sparse models). Various robustness tests further corroborate our main hypothesis.