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Development Effects of Electrification: Evidence from the Geologic Placement of Hydropower Plants in Brazil

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  • Barham, Tania
  • Lipscomb, Molly
  • Mobarak, Ahmed Mushfiq

Abstract

We estimate the development effects of electrification across Brazil over the period 1960-2000. Brazil relies almost exclusively on hydropower, which requires intercepting water at high velocity. We build an engineering model which takes as inputs only geography (river gradient, water flow and Amazon) and simulates a time series of hypothetical electricity grids for Brazil that show how the grid would have evolved had infrastructure investments been made based solely on geologic cost considerations, ignoring all demand-side concerns. Using the model as an instrument, we document large positive effects of electrification on development that are underestimated when one fails to account for the political allocation of infrastructure projects or its targeting to under-developed areas. Broad-based improvement in labor productivity across sectors and areas rather than general equilibrium re-sorting (in-migration to electrified counties) appears to be the likely mechanism by which these development gains are realized.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8427.

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Date of creation: Jun 2011
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Handle: RePEc:cpr:ceprdp:8427

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  10. Taryn Dinkelman, 2010. "The E ects of Rural Electri cation on Employment: New Evidence from South Africa," Working Papers 1255, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
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Cited by:
  1. Alby, Philippe & Dethier, Jean-Jacques & Straub, Stéphane, 2011. "Let there be Light! Firms Operating under Electricity Constraints in Developing Countries," IDEI Working Papers 686, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Alby, Philippe & Dethier, Jean-Jacques & Straub, Stephane, 2010. "Firms operating under infrastructure and credit constraints in developing countries : the case of power generators," Policy Research Working Paper Series 5497, The World Bank.

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