Delays in Connecting Firms to Electricity: What Matters?

This paper discusses institutional factors that influence delays in connecting businesses to electricity across the world. These delays lead to significant economic consequences at the early stages of commercial operations of a newly established firm. The level of economic development of a country can influence this indicator, but there are also conflicting results as quality of institutions increase, in a duality of increasing regulation and control of corruption. Aggregate national level data from World Bank Enterprise Surveys Project, Worldwide Governance Indicators and World Development Indicators is used to estimate and quantify these effects in a broad sample of 141 countries across the world. Panel data techniques are implemented to explore the fact that there are multiple surveys conducted over time, particularly in transition economies (mostly FSU economies). Analysis is mainly focused on this sub-sample of transition economies. There is clear evidence of a positive effect of increased control of corruption and the negative effect of increasing regulation, likely to be associated with extra steps to establish a connection. The latter result is also confirmed by alternative measures of regulation in the power sector in transition economies. There is no evidence that interconnected advances in several dimensions of governance leads to positive outcomes in this context.