International Review of Environmental and Resource Economics > Vol 12 > Issue 1

The Impact of Electricity on Economic Development: A Macroeconomic Perspective

Paul J. Burke, Crawford School of Public Policy, The Australian National University, Australia, paul.j.burke@anu.edu.au David I. Stern, Crawford School of Public Policy, The Australian National University, Australia, david.stern@anu.edu.au Stephan B. Bruns, Center for Environmental Sciences, Hasselt University, Belgium, stephan.bruns@uhasselt.be
 
Suggested Citation
Paul J. Burke, David I. Stern and Stephan B. Bruns (2018), "The Impact of Electricity on Economic Development: A Macroeconomic Perspective", International Review of Environmental and Resource Economics: Vol. 12: No. 1, pp 85-127. http://dx.doi.org/10.1561/101.00000101

Published: 06 Nov 2018
© 2018 P. J. Burke, D. I. Stern and S. B. Bruns
 
Subjects
Public Economics,  Environmental Economics
 
Keywords
JEL Codes: O13Q43
Electricityeconomic developmentreliabilityeconomic growthAfrica
 

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In this article:
1. Introduction
2. Energy and Economic Growth
3. Electricity and Development
4. Exploring the Data
5. Macro Studies Using Time-Series Data
6. Studies on the Effects of Electricity Infrastructure
7. Case Studies: Electrification Success Stories
8. Conclusions and Research Priorities
Appendix: Data Sources for Figures
References

Abstract

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.

DOI:10.1561/101.00000101