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Effects of improving infrastructure quality on business costs : evidence from firm-level data

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  • Iimi, Atsushi

Abstract

Economic 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.

Suggested Citation

  • Iimi, Atsushi, 2008. "Effects of improving infrastructure quality on business costs : evidence from firm-level data," Policy Research Working Paper Series 4581, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4581
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    Citations

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    Cited by:

    1. Daniel A. Mekonnen & Olutayo Adeyemi & Rachel Gilbert & Dare Akerele & Thom Achterbosch & Anna Herforth, 2023. "Affordability of healthy diets is associated with increased food systems performance in Nigeria: state-level analysis," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-27, December.
    2. World Bank & International Finance Corporation, 2013. "Doing Business 2014 : Understanding Regulations for Small and Medium-Size Enterprises," World Bank Publications - Books, The World Bank Group, number 16204, December.
    3. Douglas H. Brooks & Eugenia C. Go, 2013. "Infrastructure," Chapters, in: Hal Hill & Maria Socorro Gochoco-Bautista (ed.), Asia Rising, chapter 3, pages 76-103, Edward Elgar Publishing.
    4. Bazilian, Morgan & Onyeji, Ijeoma, 2012. "Fossil fuel subsidy removal and inadequate public power supply: Implications for businesses," Energy Policy, Elsevier, vol. 45(C), pages 1-5.
    5. World Bank, 2011. "Challenges to Enterprise Performance in the Face of the Financial Crisis : Eastern Europe and Central Asia," World Bank Publications - Books, The World Bank Group, number 2316, December.
    6. World Bank & International Finance Corporation, "undated". "Doing Business in the East African Community 2011," World Bank Publications - Reports 27390, The World Bank Group.
    7. Geginat, Carolin & Ramalho, Rita, 2018. "Electricity connections and firm performance in 183 countries," Energy Economics, Elsevier, vol. 76(C), pages 344-366.

    More about this item

    Keywords

    Transport Economics Policy&Planning; Town Water Supply and Sanitation; Private Participation in Infrastructure; Infrastructure Economics; Urban Slums Upgrading;
    All these keywords.

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