IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/1801.html
   My bibliography  Save this paper

Power Sector Reform and Corruption: Evidence from Electricity Industry in Sub-Saharan Africa

Author

Listed:
  • Imam, M.
  • Jamasb, T.
  • Llorca, M.
  • Llorca, M.

Abstract

We analyse the impact of corruption and two key aspects of electricity sector reforms, such as the creation of independent regulatory agencies and private sector participation, on several performance indicators in Sub-Saharan Africa. We find that corruption reduces technical efficiency of the sector and constrains the efforts to increase access to electricity and national income. However, some negative effects are offset where independent regulators are established and privatisation is implemented. Our findings suggest that well-designed reforms not only boost economic performance of the sector, but also reduce the negative effects of macro-level institutional deficiencies, such as corruption, on performance indicators.

Suggested Citation

  • Imam, M. & Jamasb, T. & Llorca, M. & Llorca, M., 2018. "Power Sector Reform and Corruption: Evidence from Electricity Industry in Sub-Saharan Africa," Cambridge Working Papers in Economics 1801, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1801
    as

    Download full text from publisher

    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1801.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Niklas Potrafke, 2010. "Does government ideology influence deregulation of product markets? Empirical evidence from OECD countries," Public Choice, Springer, vol. 143(1), pages 135-155, April.
    2. Estache, Antonio & Trujillo, Lourdes, 2009. "Corruption and infrastructure services: An overview," Utilities Policy, Elsevier, vol. 17(2), pages 153-155, June.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    5. Yin-Fang Zhang & David Parker & Colin Kirkpatrick, 2008. "Electricity sector reform in developing countries: an econometric assessment of the effects of privatization, competition and regulation," Journal of Regulatory Economics, Springer, vol. 33(2), pages 159-178, April.
    6. Estache, Antonio & Goicoechea, Ana & Trujillo, Lourdes, 2009. "Utilities reforms and corruption in developing countries," Utilities Policy, Elsevier, vol. 17(2), pages 191-202, June.
    7. Hans Pitlik, 2007. "A race to liberalization? Diffusion of economic policy reform among OECD-economies," Public Choice, Springer, vol. 132(1), pages 159-178, July.
    8. Barreto, Raul A., 2000. "Endogenous corruption in a neoclassical growth model," European Economic Review, Elsevier, vol. 44(1), pages 35-60, January.
    9. Ahlborg, Helene & Boräng, Frida & Jagers, Sverker C. & Söderholm, Patrik, 2015. "Provision of electricity to African households: The importance of democracy and institutional quality," Energy Policy, Elsevier, vol. 87(C), pages 125-135.
    10. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    11. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    12. Dal Bo, Ernesto & Rossi, Martin A., 2007. "Corruption and inefficiency: Theory and evidence from electric utilities," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 939-962, June.
    13. Levy, Brian & Spiller, Pablo T, 1994. "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 201-246, October.
    14. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    15. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    16. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    17. Auriol, Emmanuelle & Blanc, Aymeric, 2009. "Capture and corruption in public utilities: The cases of water and electricity in Sub-Saharan Africa," Utilities Policy, Elsevier, vol. 17(2), pages 203-216, June.
    18. Chang, Chun Ping & Berdiev, Aziz N., 2011. "The political economy of energy regulation in OECD countries," Energy Economics, Elsevier, vol. 33(5), pages 816-825, September.
    19. Liam Wren-Lewis, 2015. "Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean," World Bank Economic Review, World Bank Group, vol. 29(2), pages 353-384.
    20. Jamasb, Tooraj, 2006. "Between the state and market: Electricity sector reform in developing countries," Utilities Policy, Elsevier, vol. 14(1), pages 14-30, March.
    21. John Cubbin & Jon Stern, 2006. "The Impact of Regulatory Governance and Privatization on Electricity Industry Generation Capacity in Developing Economies," World Bank Economic Review, World Bank Group, vol. 20(1), pages 115-141.
    22. Eberhard, Anton & Gratwick, Katharine Nawaal, 2011. "IPPs in Sub-Saharan Africa: Determinants of success," Energy Policy, Elsevier, vol. 39(9), pages 5541-5549, September.
    23. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    24. Erdogdu, Erkan, 2013. "Implications of liberalization policies on government support to R&D: Lessons from electricity markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 17(C), pages 110-118.
    25. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-348, November.
    26. Spiller, Pablo T, 1990. "Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or "Let Them Be Bribed."," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 65-101, April.
    27. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge.
    28. Kwabena Gyimah-Brempong & Samaria de Gyimah-Brempong, 2006. "Corruption, Growth, and Income Distribution: Are there Regional Differences?," Economics of Governance, Springer, vol. 7(3), pages 245-269, August.
    29. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," World Bank Economic Review, World Bank Group, vol. 13(2), pages 357-378, May.
    30. Bhattacharyya, Subhes C., 2006. "Energy access problem of the poor in India: Is rural electrification a remedy?," Energy Policy, Elsevier, vol. 34(18), pages 3387-3397, December.
    31. Williams, J.H. & Ghanadan, R., 2006. "Electricity reform in developing and transition countries: A reappraisal," Energy, Elsevier, vol. 31(6), pages 815-844.
    32. Nepal, Rabindra & Jamasb, Tooraj, 2012. "Reforming the power sector in transition: Do institutions matter?," Energy Economics, Elsevier, vol. 34(5), pages 1675-1682.
    33. Nagayama, Hiroaki, 2007. "Effects of regulatory reforms in the electricity supply industry on electricity prices in developing countries," Energy Policy, Elsevier, vol. 35(6), pages 3440-3462, June.
    34. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-319, March.
    35. repec:idb:brikps:82983 is not listed on IDEAS
    36. Doll, Christopher N.H. & Pachauri, Shonali, 2010. "Estimating rural populations without access to electricity in developing countries through night-time light satellite imagery," Energy Policy, Elsevier, vol. 38(10), pages 5661-5670, October.
    37. Joseph Stiglitz, 1998. "Distinguished Lecture on Economics in Government: The Private Uses of Public Interests: Incentives and Institutions," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 3-22, Spring.
    38. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    39. Fredriksson, Per G. & Vollebergh, Herman R. J. & Dijkgraaf, Elbert, 2004. "Corruption and energy efficiency in OECD countries: theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 207-231, March.
    40. Estache, Antonio & Wren-Lewis, Liam, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," CEPR Discussion Papers 8082, C.E.P.R. Discussion Papers.
    41. Smith, Thomas B., 2004. "Electricity theft: a comparative analysis," Energy Policy, Elsevier, vol. 32(18), pages 2067-2076, December.
    42. Ritva Reinikka & Jakob Svensson, 2005. "Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 259-267, 04/05.
    43. Tooraj Jamasb & Rabindra Nepal & Govinda R. Timilsina, 2017. "A Quarter Century Effort Yet to Come of Age: A Survey of Electricity Sector Reform in Developing Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    44. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    45. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
    46. Clare Leaver, 2009. "Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies," American Economic Review, American Economic Association, vol. 99(3), pages 572-607, June.
    47. David Roodman, 2008. "Through the Looking-Glass, and What OLS Found There: On Growth, Foreign Aid, and Reverse Causality," Working Papers 137, Center for Global Development.
    48. Anton Eberhard & Vivien Foster & Cecilia Briceño-Garmendia & Fatimata Ouedraogo & Daniel Camos & Maria Shkaratan, . "Underpowered : The State of the Power Sector in Sub-Saharan Africa," World Bank Other Operational Studies, The World Bank, number 7833.
    49. Nepal, Rabindra & Jamasb, Tooraj, 2012. "Reforming small electricity systems under political instability: The case of Nepal," Energy Policy, Elsevier, vol. 40(C), pages 242-251.
    50. Shapiro, C. & Willing, D.R., 1990. "Economic Rationales For The Scope Of Privatization," Papers 41, Princeton, Woodrow Wilson School - Discussion Paper.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cummins, Mark & Gillanders, Robert, 2020. "Greasing the Turbines? Corruption and access to electricity in Africa," Energy Policy, Elsevier, vol. 137(C).
    2. Juyong Lee & Youngsang Cho & Yoonmo Koo & Chansoo Park, 2018. "Effects of Market Reform on Facility Investment in Electric Power Industry: Panel Data Analysis of 27 Countries," Sustainability, MDPI, Open Access Journal, vol. 10(9), pages 1-16, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Imam, Mahmud I. & Jamasb, Tooraj & Llorca, Manuel, 2019. "Sector reforms and institutional corruption: Evidence from electricity industry in Sub-Saharan Africa," Energy Policy, Elsevier, vol. 129(C), pages 532-545.
    2. Mahmud I Imam & Tooraj Jamasb & Manuel Llorca, 2019. "Political Economy of Reform and Regulation in the Electricity Sector of Sub-Saharan Africa," Working Papers EPRG1917, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Tooraj Jamasb & Rabindra Nepal & Govinda R. Timilsina, 2017. "A Quarter Century Effort Yet to Come of Age: A Survey of Electricity Sector Reform in Developing Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    4. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    5. Jamasb,Tooraj & Nepal,Rabindra & Timilsina,Govinda R., 2015. "A quarter century effort yet to come of age : a survey of power sector reforms in developing countries," Policy Research Working Paper Series 7330, The World Bank.
    6. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.
    7. Rabindra, Nepal & Tooraj, Jamasb, 2013. "Caught Between Theory and Practice: Government, Market, and Regulatory Failure in Electricity Sector Reforms," SIRE Discussion Papers 2013-22, Scottish Institute for Research in Economics (SIRE).
    8. Asantewaa, Adwoa & Jamasb, Tooraj & Llorca, Manuel, 2020. "Electricity Sector Reform Performance in Sub-Saharan Africa: A Parametric Distance Function Approach," Working Papers 14-2020, Copenhagen Business School, Department of Economics.
    9. Nepal, Rabindra & Jamasb, Tooraj, 2015. "Caught between theory and practice: Government, market, and regulatory failure in electricity sector reforms," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 16-24.
    10. Liam Wren-Lewis, 2015. "Do Infrastructure Reforms Reduce the Effect of Corruption? Theory and Evidence from Latin America and the Caribbean," World Bank Economic Review, World Bank Group, vol. 29(2), pages 353-384.
    11. Arminen, Heli & Menegaki, Angeliki N., 2019. "Corruption, climate and the energy-environment-growth nexus," Energy Economics, Elsevier, vol. 80(C), pages 621-634.
    12. Nepal, Rabindra & Jamasb, Tooraj, 2012. "Reforming the power sector in transition: Do institutions matter?," Energy Economics, Elsevier, vol. 34(5), pages 1675-1682.
    13. Erkan Erdogdu, 2014. "The Political Economy of Electricity Market Liberalization: A Cross-country Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    14. Hu, Juncheng, 2021. "Do facilitation payments affect earnings management? Evidence from China," Journal of Corporate Finance, Elsevier, vol. 68(C).
    15. Shrabani Saha & Kunal Sen, 2019. "The corruption-growth relationship: Do political institutions matter?," WIDER Working Paper Series wp-2019-65, World Institute for Development Economic Research (UNU-WIDER).
    16. Qu, Guangjun & Sylwester, Kevin & Wang, Feng, 2016. "Anticorruption and Growth: Evidence from China," MPRA Paper 72190, University Library of Munich, Germany.
    17. Polemis, Michael L., 2016. "New evidence on the impact of structural reforms on electricity sector performance," Energy Policy, Elsevier, vol. 92(C), pages 420-431.
    18. Michel Dumont, 2015. "Working Paper 05-15 - Evaluation of federal tax incentives for private R&D in Belgium: An update," Working Papers 1505, Federal Planning Bureau, Belgium.
    19. Ejike Udeogu (a) , Uzochukwu Amakom (b) and Shampa Roy-Mukherjee (a), 2021. "Empirical Analysis of an Augmented Schumpeterian Endogenous Growth Model," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 46(1), pages 53-84, March.
    20. Krieger, Tim & Meierrieks, Daniel, 2016. "Political capitalism: The interaction between income inequality, economic freedom and democracy," European Journal of Political Economy, Elsevier, vol. 45(C), pages 115-132.

    More about this item

    Keywords

    Panel data; dynamic GMM; electricity sector reform; corruption; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cam:camdae:1801. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.econ.cam.ac.uk/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jake Dyer (email available below). General contact details of provider: https://www.econ.cam.ac.uk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.