Underutilized potential : the business costs of unreliable infrastructure in developing countries : Lifelines: the Resilient Infrastructure Opportunity : background paper

This study constructs a microdata set of about 143,000 firms to estimate the monetary costs of infrastructure disruptions in 137 low- and middle-income countries, representing 78 percent of the world population and 80 percent of the GDP of low- and -middle-income countries. Specifically, this study assesses the impact of transport, electricity, and water disruptions on the capacity utilization rates of firms. The estimates suggest that utilization losses amount to 151 billion dollar a year-of which 107 billion dollar are due to transport disruptions, 38 billion dollar due to blackouts, and 6 billion dollar due to dryouts. Moreover, this study shows that electricity outages are causing sales losses equivalent to 82 billion dollar a year. Firms are also incurring the costs of self-generated electricity, estimated to amount to 64 billion dollar a year (including annualized capital expenditure). At almost 300 billion dollar a year, these figures highlight the substantial drag that unreliable infrastructure imposes on firms in developing countries. Yet, these figures are likely to be under-estimates as neither all countries nor all types of impacts are covered