Effects of improving infrastructure quality on business costs : evidence from firm-level data
AbstractEconomic development is affected by infrastructure services in both volume and quality terms. However, the quality of infrastructure is relatively difficult to measure and assess. The current paper, using firm-level data collected by a business environment assessment survey in 26 countries in Europe and Central Asia, estimates the marginal impacts on firm costs of infrastructure quality. The results suggest that the reliability or continuity of services is important for business performance. Firm costs significantly increase when electricity outages occur more frequently and theaverage outage duration becomes longer. Similarly, increased hours of water supply suspensions also reduce firms'competitiveness. In these countries, it is found that the total benefit for the economy from eliminating the existing electricity outages ranges from 0.5 to 6 percent of gross domestic product. If all water suspensions are removed, the economy could receive a gain of about 0.5 to 2 percent of gross domestic product. By contrast, the quality of telecommunications services seems to have no significant impact.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4581.
Date of creation: 01 Mar 2008
Date of revision:
Transport Economics Policy&Planning; Town Water Supply and Sanitation; Private Participation in Infrastructure; Infrastructure Economics; Urban Slums Upgrading;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-13 (All new papers)
- NEP-EFF-2008-09-13 (Efficiency & Productivity)
- NEP-TRA-2008-09-13 (Transition Economics)
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- World Bank, 2011. "Challenges to Enterprise Performance in the Face of the Financial Crisis : Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 2316, October.
- World Bank & International Finance Corporation, 2013. "Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises," World Bank Publications, The World Bank, number 16204, October.
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