The Impact of Electricity on Economic Development: A Macroeconomic Perspective

By Paul J. Burke, David I. Stern, Stephan B. Bruns. International Review of Environmental and Resource Economics, 2017

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This paper provides a review of the macro-level evidence on the importance of electricity for economic development. We find that electricity access and use are strongly correlated with economic development, as theory suggests. Despite a large empirical literature, however, there are few methodologically strong studies that establish causal effects of either electricity use or electricity infrastructure on economic growth. The micro-level literature provides more convincing evidence of causal effects, although these appear not to be uniform in all locations. We present a number of country case studies that are suggestive of electrification playing an important role in broad-based development progress. The paper also identifies potential avenues for future research. High-quality macro-level evidence on the economic effects of electricity access and reliability would help policy-makers and aid agencies make decisions regarding investment priorities.

Subfields: Economics and Econometrics, Pollution

View Paper: https://www.semanticscholar.org/paper/d8e5045ca07e0a9abc82687c0e2049075665a16d