Electricity sector reform in developing countries: an econometric assessment of the effects of privatisation, competition and regulation

Over the last two decades electricity sectors in both developed and developingcountries have been subject to restructuring to introduce private capital and increasecompetition. Although the effects of such reforms in a number of the developedeconomies are now well documented, apart from a few case studies the experience ofdeveloping countries is much less well researched. This paper provides aneconometric assessment of the effects of privatisation, competition and regulation onthe performance of the electricity generation industry using panel data for 36developing and transitional countries, over the period 1985 to 2003. The studyidentifies the impact of these reforms on generating capacity, electricity generated,labour productivity in the generating sector and capacity utilisation. The mainconclusions are that on their own privatisation and regulation do not lead to obviousgains in economic performance, though there are some positive interaction effects. Bycontrast, introducing competition does seem to be effective in stimulatingperformance improvements.