Glowing Indicators: Nighttime Luminosity as a Tool for Assessing SDG‐8 Progress in Emerging Economies

Tracking the economic development of local governments in emerging economies is difficult with conventional data. This paper shows that the nighttime luminosity lights can be used as a reliable proxy for economic growth at the county level. To access this, the research employs the time‐varying difference‐in‐difference technique, utilizing a longitudinal data set at the county level to scrutinize the incentive effects of this Province Managing County (PMC) reform on economic growth using nighttime luminosity lights. The analysis reveals that the local fiscal incentives introduced by this reform and achieved through alleviating fiscal stress and providing expenditure autonomy significantly impact economic growth activity and influence local government policy decisions. The outcomes manifest more conspicuously in regions with dense nighttime luminosity and those characterized by more market‐driven efficiencies and industrial upgradation. Additionally, the reform encourages counties to adopt a more proactive fiscal policy characterized by increased capital expenditure to promote economic growth while reducing expenditures on public service provisions. These findings support positing that a flattened hierarchical structure ameliorates delays in fiscal matters and facilitates communication across various levels of government in the context of improved marketization and upgraded industrial upgradation.