2013年-世界发展银行全球_Firms_Operating_under_Electricity_Constraints_in_Developing_Countries_24页_246kb

Summary of "Firms Operating under Electricity Constraints in Developing Countries"

Core Content

This paper examines the impact of electricity constraints on firm behavior in developing countries, focusing on the decision to invest in self-generated electricity (generators) as a response to unreliable grid power. The study uses a large cross-country dataset from the World Bank Enterprise Survey and develops a theoretical model to explain the observed patterns in firm investment and size distribution.

Main Views and Key Information

1. Electricity Constraints and Firm Behavior

• Many developing countries suffer from unreliable and insufficient electricity supply, forcing enterprises to rely on self-generation despite it being a suboptimal solution.
• Electricity-intensive sectors in high-outage countries have a lower proportion of small firms, indicating that small firms are more vulnerable to power outages.
• In Sub-Saharan Africa, South Asia, and East Asia and Pacific, the number of power outages is particularly high, with South Asia experiencing the most (131.74 outages per year on average).
• Generator ownership is more common in high-outage regions, with 61.7% in South Asia and 36.6% in Sub-Saharan Africa.

2. Cost and Impact of Self-Generation

• Self-generated electricity is 313% more expensive than grid electricity on average in Africa.
• Firms in countries with poor electricity infrastructure, such as Nigeria, spend up to 20–30% of their initial investment on improving electricity reliability.
• The cost of outages disproportionately affects small firms, which are less able to afford generators and are more likely to be excluded from the formal sector due to these constraints.

3. Firm Size and Generator Ownership

• Large firms are more likely to own generators, as they have greater financial resources to invest in them.
• Small firms are more constrained and tend to avoid self-generation due to cost and access issues.
• The distribution of firm sizes is skewed in electricity-sensitive sectors, with fewer small firms and more large firms that invest in generators.

4. Theoretical Model of Investment Behavior

• The model assumes a moral hazard credit framework, where the probability of project success depends on the entrepreneur's effort.
• Firms with higher sensitivity to electricity are more affected by outages and thus more likely to invest in generators.
• The model predicts that electricity deficiencies have nonlinear effects on firm size distribution, with more outages leading to fewer small firms in electricity-sensitive sectors.
• There is a threshold level of outages ($\delta_0$) beyond which firms cannot operate without generators.

5. Empirical Evidence and Findings

• The variance in generator ownership is partially explained by country-level fixed effects (19%) and firm characteristics (e.g., size, ownership, exporting status).
• Firm size explains about 10% of the variance in generator ownership.
• Firms with generators experience more outages than those without, likely due to selection bias.
• Electricity deficiencies reduce overall investment and productivity, especially in Uganda and other countries where firms have invested in generators.

6. Policy Implications

• The formal sector is more affected by electricity outages than the informal sector, with small formal firms being the primary victims.
• Improving electricity reliability can lead to increased productivity and economic growth.
• Investing in infrastructure is crucial to reduce the burden on small firms and promote equitable economic development.

Structure of the Paper

1. Introduction

   • Highlights the importance of electricity infrastructure for economic growth and firm performance.
   • Notes that electricity constraints lead to self-generation, which is costly and inefficient.

2. Data and Stylized Facts

   • Uses data from 87 countries and 46,606 firms.
   • Provides descriptive statistics on the severity of electricity outages and generator ownership.
   • Emphasizes the disproportionate impact on small and informal firms.

3. Theoretical Model

   • A moral hazard credit model is developed to analyze firm investment decisions under electricity constraints.
   • Predicts that firm size distribution is affected by the degree of electricity sensitivity and outage frequency.

4. Econometric Specifications

   • Empirical models are tested to validate the theoretical predictions.
   • Variables such as firm size, ownership, exporting status, and location are considered.

5. Results

   • Demonstrates that electricity deficiencies have a nonlinear effect on firm size and generator ownership.
   • Shows that higher electricity sensitivity leads to fewer small firms and more large firms investing in generators.

6. Limitations of the Data

   • Notes that the dataset is limited to formal registered firms.
   • Some variables, such as generator usage intensity, are not captured.
   • Endogeneity and unobserved firm attributes (e.g., political connections) may affect the results.

7. Policy Implications

   • Suggests that improving electricity supply can reduce the need for self-generation and promote equitable firm growth.
   • Highlights the importance of targeted infrastructure investment to support small and informal firms.

Conclusion

The paper concludes that electricity constraints significantly affect firm investment decisions and size distribution. In electricity-sensitive sectors, the number of outages leads to a skewed industrial structure with fewer small firms and more large firms that invest in generators. The findings emphasize the need for policy interventions to improve electricity infrastructure and reduce the burden on small enterprises.