What drives firms’ intention to prioritise public spending in the energy sector?: evidence from Eastern Europe and Central Asia

Hassan Gholipour Fereidouni, Amir Arjomandi and Florian Gerth

Post-Communist Economies, 2024, vol. 36, issue 8, 993-1013

Abstract: Firms’ reliance on energy is a critical issue that affects all economies, regardless of ideology, yet their preferences for public spending in the energy sector remain underexplored. This study examines the factors influencing firms’ prioritisation of public spending on energy over other sectors, using data from the World Bank’s Enterprise Surveys covering 30 Eastern European and Central Asian countries. Probit regression analysis reveals that businesses experiencing frequent power outages and perceiving electricity as a significant operational obstacle are more likely to prioritise energy-related spending. This preference is stronger in emerging market economies and low-income developing countries than in advanced nations. Additionally, while firm characteristics such as size, age, ownership, political connections, and government contracts show limited influence on firms’ prioritisation of public spending in the energy sector, industry type plays an important role. These findings highlight the critical role of energy infrastructure in shaping firms’ policy preferences, particularly in economically vulnerable contexts.

Date: 2024
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DOI: 10.1080/14631377.2024.2439199

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