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Firms Operating under Electricity Constraints in Developing Countries

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  • Philippe Alby
  • Jean-Jacques Dethier
  • Stéphane Straub

Abstract

Many developing countries are unable to provide their industrial sectors with reliable electric power, with the result that many enterprises must contend with an insufficient and unreliable supply of electricity. Because of these constraints, enterprises often opt for self-generation of electricity even though it is widely considered a second-best solution. This paper develops a theoretical model of investment behavior in remedial infrastructure in the presence of physical constraints. It then illustrates the model's predictions using a large cross-country sample of enterprises from the World Bank Enterprise Survey database. Electricity-intensive sectors in high-outage countries are characterized by a significantly lower share of small firms. Copyright 2013, Oxford University Press.

Suggested Citation

  • Philippe Alby & Jean-Jacques Dethier & Stéphane Straub, 2013. "Firms Operating under Electricity Constraints in Developing Countries," World Bank Economic Review, World Bank Group, vol. 27(1), pages 109-132.
  • Handle: RePEc:oup:wbecrv:v:27:y:2013:i:1:p:109-132
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    File URL: http://hdl.handle.net/10.1093/wber/lhs018
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    Citations

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    Cited by:

    1. Adewuyi, Adeolu & Emmanuel, Zachariah, 2018. "Electricity Outages and Firm Performance Across the Six Geo-Political Zones in Nigeria: The Role of Corruption," MPRA Paper 92089, University Library of Munich, Germany, revised 03 Feb 2019.
    2. Fisher-Vanden, Karen & Mansur, Erin T. & Wang, Qiong (Juliana), 2015. "Electricity shortages and firm productivity: Evidence from China's industrial firms," Journal of Development Economics, Elsevier, vol. 114(C), pages 172-188.
    3. repec:eee:enepol:v:122:y:2018:i:c:p:715-726 is not listed on IDEAS
    4. repec:eee:deveco:v:134:y:2018:i:c:p:150-159 is not listed on IDEAS
    5. Mensah, Justice Tei, 2016. "Bring Back our Light: Power Outages and Industrial Performance in Sub-Saharan Africa," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236587, Agricultural and Applied Economics Association.
    6. Justice Tei Mensah, 2016. "Bring Back Our Light: Power Outages and Industrial Performance in Sub-Saharan Africa," Working Papers 2016.20, FAERE - French Association of Environmental and Resource Economists.
    7. Nakhoda, Aadil, 2014. "The impact of electricity constraints on access to finance: A firm-level study," MPRA Paper 59507, University Library of Munich, Germany.
    8. Dominique van de Walle & Martin Ravallion & Vibhuti Mendiratta & Gayatri Koolwal, 2017. "Long-term Gains from Electrification in Rural India," World Bank Economic Review, World Bank Group, vol. 31(2), pages 385-411.
    9. Chaurey, Ritam & Le, Duong Trung, 2018. "Infrastructure Grants and the Performance of Microenterprises," IZA Discussion Papers 11749, Institute of Labor Economics (IZA).
    10. Adewuyi, Adeolu & Emmanuel, Zachariah, 2018. "Electricity Outages and Firm Performance Across the Six Geo-Political Zones in Nigeria: The Role of Corruption," MPRA Paper 92091, University Library of Munich, Germany, revised 04 Feb 2019.
    11. repec:eee:eneeco:v:76:y:2018:i:c:p:344-366 is not listed on IDEAS
    12. Stel, Nora & Naudé, Wim, 2013. "Public-Private Entanglement: Entrepreneurship in a Hybrid Political Order, the Case of Lebanon," IZA Discussion Papers 7795, Institute of Labor Economics (IZA).
    13. repec:wsi:jicepx:v:03:y:2012:i:03:n:s1793993312500159 is not listed on IDEAS
    14. repec:eee:rensus:v:75:y:2017:i:c:p:393-401 is not listed on IDEAS
    15. Anna Falentina & Budy Resosudarmo, 2019. "The impact of blackouts on the performance of micro and small enterprises: Evidence from Indonesia," Departmental Working Papers 2019-01, The Australian National University, Arndt-Corden Department of Economics.
    16. Steinbuks Jevgenijs, 2012. "Firms' Investment under Financial and Infrastructure Constraints: Evidence from In-House Generation in Sub-Saharan Africa," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-34, October.
    17. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2014. "Spatial dynamics of electricity usage in India," Policy Research Working Paper Series 7055, The World Bank.
    18. Antonio Estache, 2014. "Infrastructure and Corruption: a Brief Survey," Working Papers ECARES ECARES 2014-37, ULB -- Universite Libre de Bruxelles.

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