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

  • Molly Lipscomb
  • A. Mushfiq Mobarak
  • Tania Barham

We estimate the development effects of electrification across Brazil over the period 1960-2000. We simulate a time series of hypothetical electricity grids for Brazil for the period 1960-2000 that show how the grid would have evolved had infrastructure investments been made based solely on geography-based cost considerations. Using the model as an instrument, we document large positive effects of electrification on development that are underestimated when one fails to account for endogenous targeting. Broad-based improvement in labor productivity across sectors and regions rather than general equilibrium re-sorting appears to be the likely mechanism by which these development gains are realized. (JEL H54, L94, O11, O13, Q41, Q43)

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 5 (2013)
Issue (Month): 2 (April)
Pages: 200-231

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Handle: RePEc:aea:aejapp:v:5:y:2013:i:2:p:200-231
Note: DOI: 10.1257/app.5.2.200
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  1. Cadot, Olivier & Roller, Lars-Hendrik & Stephan, Andreas, 2006. "Contribution to productivity or pork barrel? The two faces of infrastructure investment," Journal of Public Economics, Elsevier, vol. 90(6-7), pages 1133-1153, August.
  2. Guy Michaels, 2007. "The effect of trade on the demand for skill - evidence from the interstate highway system," LSE Research Online Documents on Economics 3268, London School of Economics and Political Science, LSE Library.
  3. Khandker, Shahidur R. & Barnes, Douglas F. & Samad, Hussain & Minh, Nguyen Huu, 2009. "Welfare impacts of rural electrification : evidence from Vietnam," Policy Research Working Paper Series 5057, The World Bank.
  4. Catherine J. Morrison & Amy Ellen Schwartz, 1992. "State Infrastructure and Productive Performance," NBER Working Papers 3981, National Bureau of Economic Research, Inc.
  5. David Aschauer, 1988. "Is public expenditure productive?," Staff Memoranda 88-7, Federal Reserve Bank of Chicago.
  6. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2002. "Growth, inequality, and poverty in rural China: the role of public investments," Research reports 125, International Food Policy Research Institute (IFPRI).
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