Power Constraints and Firm-Level Total Factor Productivity in Developing Countries

This paper analyzes the effects of power outages and constraints on manufacturing firms' revenue-based total factor productivity in developing countries. The empirical analysis is based on the World Bank Enterprise Survey datasets for 84 countries over 2006-2019. The paper starts by showing sta...

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Bibliographic Details
Main Author: Apeti, Ablam Estel
Other Authors: Ly, Alpha
Format: eBook
Language:English
Published: Washington, D.C The World Bank 2023
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
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245 0 0 |a Power Constraints and Firm-Level Total Factor Productivity in Developing Countries  |h Elektronische Ressource  |c Ablam Estel Apeti 
260 |a Washington, D.C  |b The World Bank  |c 2023 
300 |a 40 pages 
653 |a Energy 
653 |a World Bank Enterprise Survey Data 
653 |a Private Participation in Infrastructure 
653 |a Productivity and Infrastructure 
653 |a Electricity Outages 
653 |a Law and Development 
653 |a Power Grid 
653 |a Infrastructure Economics and Finance 
653 |a Power and Economic Growth 
653 |a Commercial Power Outage Impact 
653 |a Electric Power 
653 |a Infrastructure Economics 
653 |a Power Constraints 
653 |a Productivity Constraint 
653 |a Private Sector Development Law 
700 1 |a Ly, Alpha 
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082 0 |a 330 
520 |a This paper analyzes the effects of power outages and constraints on manufacturing firms' revenue-based total factor productivity in developing countries. The empirical analysis is based on the World Bank Enterprise Survey datasets for 84 countries over 2006-2019. The paper starts by showing statistically that firms facing power outages differ and operate in very different environments compared to firms not facing power outages, underlining a potential nonrandom issue of the treatment variable. The matching-based approach (entropy balancing) is designed to contain this type of bias. It shows that power outages negatively and significantly affect firm-level revenue-based total factor productivity, with a 9 percent lower unconditional average productivity for exposed firms compared to nonexposed firms. Moreover, the estimates suggest a connection between the severity of self-reported power constraints or obstacles by firms and the magnitude of revenue-based total factor productivity loss. The results also indicate that the effect of power outages on firm-level revenue-based total factor productivity could be influenced by the stage of economic development (low-income countries, lower-middle-income countries, upper-middle-income countries), and the ability of firms to engage in research and development and purchase backup generators. These findings suggest that to ensure economic development, the government should provide a stable power supply that can mitigate the negative shocks faced by manufacturing firms and enhance their productivity and competitiveness, allowing them to drive economic growth