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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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Cited by:
  1. Alby, Philippe & Dethier, Jean-Jacques & Straub, Stéphane, 2011. "Let there be Light! Firms Operating under Electricity Constraints in Developing Countries," TSE Working Papers 11-255, Toulouse School of Economics (TSE).
  2. Catherine Wolfram & Orie Shelef & Paul Gertler, 2012. "How Will Energy Demand Develop in the Developing World?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 119-38, Winter.
  3. Alan Fuchs & Paul Gertler & Orie Shelef & Catherine Wolfram, 2013. "Poverty, Growth and the Demand for Energy-Using Assets," Discussion Papers 13-004, Stanford Institute for Economic Policy Research.
  4. Louise Grogan, 2013. "Rural Electrification and Employment in Poor Countries: Evidence from Nicaragua," Working Papers 1303, University of Guelph, Department of Economics and Finance.
  5. Rao, Narasimha D., 2013. "Does (better) electricity supply increase household enterprise income in India?," Energy Policy, Elsevier, vol. 57(C), pages 532-541.
  6. Ujjayant Chakravorty & Martino Pelli & Beyza Ural Marchand, 2013. "Does the Quality of Electricity Matter? Evidence from Rural India," CESifo Working Paper Series 4457, CESifo Group Munich.
  7. Gray, Rowena, 2013. "Taking technology to task: The skill content of technological change in early twentieth century United States," Explorations in Economic History, Elsevier, vol. 50(3), pages 351-367.
  8. van de Walle, Dominique & Ravallion, Martin & Mendiratta, Vibhuti & Koolwal, Gayatri, 2013. "Long-term impacts of household electrification in rural India," Policy Research Working Paper Series 6527, The World Bank.
  9. Lars-Erik Borge & Pernille Parmer & Ragnar Torvik, 2013. "Local Natural Resource Curse?," Working Papers 0014, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
  10. Carl Kitchens & Price Fishback, 2013. "Flip the Switch: The Spatial Impact of the Rural Electrification Administration 1935-1940," NBER Working Papers 19743, National Bureau of Economic Research, Inc.
  11. Kumar, Santosh & Rauniyar, Ganesh, 2011. "Is electrification welfare improving?: non-experimental evidence from rural Bhutan," MPRA Paper 31482, University Library of Munich, Germany.
  12. 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.
  13. Paul Gertler & Orie Shelef & Catherine Wolfram & Alan Fuchs, 2013. "How Pro-Poor Growth Affects the Demand for Energy," NBER Working Papers 19092, National Bureau of Economic Research, Inc.
  14. Karen Fisher-Vanden & Erin T. Mansur & Qiong (Juliana) Wang, 2012. "Costly Blackouts? Measuring Productivity and Environmental Effects of Electricity Shortages," NBER Working Papers 17741, National Bureau of Economic Research, Inc.

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