Is the Electricity Sector a Weak Link in Development?

Jonathan Colmer (), David Lagakos and Martin Shu

No 10874, CESifo Working Paper Series from CESifo

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)
JEL-codes: O11 O40 Q43 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ene
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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? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10874

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