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February 12, 2019

Fast Fact: Infrastructure and City Growth - The Impact of Bengaluru Airport

The insight that infrastructure investments boost the economy of a country is well known since the New Deal was implemented as a way to fight the Great Depression in the USA. Yet, till date academics still debate on how much infrastructure impacts growth. Part of this is to do with complexities around tools used for correlation analysis while other challenges include ironing out endogeneity issues and finding reasonable proxies to measure growth as a way around lack of disaggregated data. Even though establishing such causalities still remains a challenge, the night-time lights dataset allows us to visually observe the scope and impact of infrastructure on the economy.


Figure 1: Night-time lights of Bengaluru city - 1992 vs 2012
Source: Urban Expansion Observatory and IDFC Institute


In the above image we can see the impact of the construction of Bengaluru airport on the economic development of that area. The image on the left is taken in 1992 when the airport wasn’t there and the image on the right is taken in 2012 after the airport was built, about 30 kilometres to the north of the city of Bengaluru. The respective images map the luminosity levels which are captured by satellites as night-time lights. Blue represents darkest regions and Yellow represents the brightest regions. The varying shades of green represent the transition from blue to yellow.


The dataset is made available by the United States Air Force Defense Meteorological Satellite Programme – Operational Linescan System (DMSP-OLS) sensor. The advantage of using this is that it is the longest available since time series (1992-2013), helping us compare economic activity before and after the construction of the Bengaluru airport which became operational only after 1998. There are some disadvantages as well- a) weather conditions like cloud cover may lead to omitted observations; b) sensitivity adjustable sensors lead to measurement errors; c) light tends to spread to unlit edges of urban areas which leads to overestimation of economic activity and lastly- d) we may observe underestimation of economic activity as very bright light is capped at a value of 63 by the sensor.  


Despite these limitations - a  visual inference is still in order. The luminosity levels of these lights can be used as a crude estimate for economic activity, when observed from a macro-perspective. If the brightness of night-time lights is increasing, over a period of two decades, then we can conclude  that economic growth is being catalysed. Clearly, we can see the intensity of yellow (bright lights) increasing towards and around the airport. Thus, increasing density of yellow lights indicates an increase in economic activity leading us to draw a correlation between infrastructure and economic activity moving together. 


The other insight we draw from this image is that economic development and urban population growth happens along transit lines. Figure 2 below explains this better where we see the growth in built-up area (essentially concrete built-up) happening beyond municipal boundaries and towards the airport. The correlation between infrastructure investment and economic growth is manifested when population growth and economic activity specifically advance along transit corridors and towards infrastructure.

Figure 2: Growth in Built-up Area for Bengaluru city - 1990 vs 2014
Source: Urban Expansion Observatory and IDFC Institute


City growth has other pull factors that contribute to economic activity and development- of which infrastructure is an important one. Identifying the effects of endogeneity, while establishing this correlation, is a tall order which requires other computational methods to complement the use of night-lights data. However it is clear that economic activity is increasingly tending towards an infrastructural asset further pointing to possible evolutionary path for cities to prosper.

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