Electricity availability: A precondition for faster economic growth?

Abstract

We investigate if greater electricity availability helps countries ascend to faster economic growth trajectories. This is an important question for many developing countries that are currently prioritizing infrastructure investments. Using cross-sectional and panel regressions with national-level decadal data, we find some evidence that electricity availability has a significant effect on subsequent economic growth. However, much of the effect disappears once suitable controls are included. We examine various dimensions of electricity availability, including electricity consumption quantity, generation capacity, residential access rate, and quality of electricity supply. It appears that electricity availability is best viewed as something that can be scaled up as economies grow rather than something that imposes binding constraints on subsequent economic growth.