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Electricity connections and firm performance in 183 countries

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  • Geginat, Carolin
  • Ramalho, Rita

Abstract

This paper presents new data on the procedures, time and costs associated with first time electricity connections for small, energy-intensive businesses in 183 economies. The study finds significant variation in the time and cost to obtain an electricity connection across countries. In low-income countries, for instance, the cost of an electricity connection is 70 times higher than in high income countries. The study finds that income levels and a newly constructed “Getting Electricity” index that combines data for the three measures (procedures, cost and time) are strongly correlated and that the new index cannot predict electrification rates and losses in the electricity system once differences in income level are considered. However, the new index presented has explanatory power for economic losses that firms report due to the poor quality of electricity supply and the likelihood of bribe payments asked from firms by electric utilities. The paper also finds that procedures for connection processes tend to be more cumbersome in countries where other regulatory processes are also complex, suggesting a persistence of bureaucracy across public sector entities in countries. Finally, the study finds that simpler and less costly electricity connection processes are associated with better firm performance in industries with high electricity needs, such as manufacturing motor vehicles.

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  • Geginat, Carolin & Ramalho, Rita, 2018. "Electricity connections and firm performance in 183 countries," Energy Economics, Elsevier, vol. 76(C), pages 344-366.
  • Handle: RePEc:eee:eneeco:v:76:y:2018:i:c:p:344-366
    DOI: 10.1016/j.eneco.2018.08.034
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    8. Brandon N. Cline & Claudia R. Williamson & Haoyang Xiong, 2022. "Trust, regulation, and market efficiency," Public Choice, Springer, vol. 190(3), pages 427-456, March.
    9. Xie, Li & Kong, Chun, 2023. "The social welfare effect of electricity user connection price policy reform," Applied Energy, Elsevier, vol. 346(C).
    10. Montrone, Lorenzo & Steckel, Jan Christoph & Kalkuhl, Matthias, 2022. "The type of power capacity matters for economic development – Evidence from a global panel," Resource and Energy Economics, Elsevier, vol. 69(C).
    11. L. A. Mierin & E. M. Korostyshevskaya & N. S. Ragimova, 2019. "The Impact of Monopolies on Small Business Development in Russia," American Journal of Economics and Sociology, Wiley Blackwell, vol. 78(5), pages 1201-1228, November.
    12. Ruiz, Francisco & Cabello, José M. & Pérez-Gladish, Blanca, 2018. "Building Ease-of-Doing-Business synthetic indicators using a double reference point approach," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 130-140.
    13. Matheus Pereira Libório & Lívia Maria Leite Silva & Petr Iakovlevitch Ekel & Letícia Ribeiro Figueiredo & Patrícia Bernardes, 2022. "Consensus-Based Sub-Indicator Weighting Approach: Constructing Composite Indicators Compatible with Expert Opinion," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(3), pages 1073-1099, December.
    14. Darragh Carr & Murray Thomson, 2022. "Non-Technical Electricity Losses," Energies, MDPI, vol. 15(6), pages 1-14, March.
    15. Summanen, Tuomo & Arminen, Heli, 2018. "Ownership unbundling in electricity distribution: The Russian experience," Energy, Elsevier, vol. 161(C), pages 1199-1210.
    16. Shadrack Muthami Mwatu, 2023. "Determinants of gendered participation in domestic trade: evidence from Kenya," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 13(1), pages 1-15, December.
    17. Marek Litzman & Martin Machay, 2016. "Legal Regulations of Production Plans: Are They Unproductive?," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 2039-2046.
    18. Remy Tehero & Emmanuel Brou Aka & Murat Cokgezen, 2020. "Drivers of the Quality of Electricity Supply," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 183-195.
    19. Siqueira, Erica H.S. & Fischer, Bruno Brandão & Bin, Adriana & Kickul, Jill, 2023. "Entrepreneurial ecosystems’ readiness towards knowledge-intensive sustainable entrepreneurship: Evidence from Brazil," Technovation, Elsevier, vol. 126(C).

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    More about this item

    Keywords

    Electricity; Firm performance; Indicators; Institutions; Regulation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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