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Regulatory governance and sector performance : methodology and evaluation for Electricity distribution in Latin America

Author

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  • Andres, Luis
  • Guasch, Jose Luis
  • Azumendi, Sebastian Lopez

Abstract

This paper contributes to the literature that explores the link between regulatory governance and sector performance. The paper develops an index of regulatory governance and estimates its impact on sector performance, showing that indeed regulation and its governance matter. The authors use two unique databases: (i) the World Bank Performance Database, which contains detailed annual data for 250 private and public electricity companies in Latin America and the Caribbean; and (ii) the Electricity Regulatory Governance Database, which contains data on several aspects of the governance of electricity agencies in the region. The authors run different models to explain the impacts of change in ownership and different characteristics of the regulatory agency on the performance of the utilities. The results suggest that the mere existence of a regulatory agency, regardless of the utilities'ownership, has a significant impact on performance. Furthermore, after controlling for the existence of a regulatory agency, the ownership dummies are still significant and with the expected signs. The authors propose an experience measure in order to identify the gradual impact of the regulatory agency on utility performance. The results confirm this hypothesis. In addition, the paper explores two different measures of governance, an aggregate measure of regulatory governance, and an index based on principal components, including autonomy, transparency, and accountability. The findings show that the governance of regulatory agencies matters and has significant effects on performance.

Suggested Citation

  • Andres, Luis & Guasch, Jose Luis & Azumendi, Sebastian Lopez, 2008. "Regulatory governance and sector performance : methodology and evaluation for Electricity distribution in Latin America," Policy Research Working Paper Series 4494, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4494
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Serebrisky, Tomás & López Azumendi, Sebastián & Alberto Andrés, Luis, 2011. "Institutional design and governance of airport regulators: The case of Latin America," Journal of Air Transport Management, Elsevier, vol. 17(4), pages 207-210.
    2. Pollitt, Michael & Stern, Jon, 2011. "Human resource constraints for electricity regulation in developing countries: Developments since 2001," Utilities Policy, Elsevier, vol. 19(2), pages 53-60, June.
    3. Martin, Brandie L. & Jayakar, Krishna, 2013. "Moving beyond dichotomy: Comparing composite telecommunications regulatory governance indices," Telecommunications Policy, Elsevier, vol. 37(9), pages 691-701.
    4. Nakhoda, Aadil, 2014. "The impact of electricity constraints on access to finance: A firm-level study," MPRA Paper 59507, University Library of Munich, Germany.
    5. Ghosh, Ranjan & Kathuria, Vinish, 2016. "The effect of regulatory governance on efficiency of thermal power generation in India: A stochastic frontier analysis," Energy Policy, Elsevier, vol. 89(C), pages 11-24.
    6. Dubois, Ute, 2009. "Adaptability of competitive electricity reforms a modular analysis," Energy Policy, Elsevier, vol. 37(4), pages 1213-1221, April.

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    Keywords

    National Governance; Infrastructure Regulation; Governance Indicators; Banks&Banking Reform; Emerging Markets;

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