Is the electricity sector a weak link in development?

Jonathan Colmer (j.colmer@virginia.edu), David Lagakos and Martin Shu

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper asks whether increasing productivity in the electricity sector can yield larger long-run GDP gains than suggested by electricity's small share of aggregate economic activity. We answer this question using a dynamic model in which electricity is a strong complement to other inputs in production. We parameterize the model using our own new measures of electricity-sector TFP across countries. The model predicts modest long-run GDP gains from improving electricity-sector TFP, contrary to the notion that electricity is a weak link. Parameterizations that make electricity a weak link mostly require the electricity sector to be counterfactually large or unproductive.

Keywords: electricity; economic development; weak link; TFP (search for similar items in EconPapers)
Date: 2024-01-03
New Economics Papers: this item is included in nep-ene, nep-reg and nep-tid
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Related works:
Working Paper: Is the Electricity Sector a Weak Link in Development? (2024)
Working Paper: Is the Electricity Sector a Weak Link in Development? (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1970

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