Underutilized Potential: The Business Costs of Unreliable Infrastructure in Developing Countries

Jun Erik Maruyama Rentschler, Martin Gunter Michail Kornejew, Stephane Hallegatte, Johannes Michael Braese and Marguerite Anne Beatrice Obolensky

No 8899, Policy Research Working Paper Series from The World Bank

Abstract: This study constructs a microdata set of about 143,000 firms to estimate the monetary costs of infrastructure disruptions in 137 low- and middle-income countries, representing 78 percent of the world population and 80 percent of the GDP of low- and -middle-income countries. Specifically, this study assesses the impact of transport, electricity, and water disruptions on the capacity utilization rates of firms. The estimates suggest that utilization losses amount to $151 billion a year -- of which $107 billion are due to transport disruptions, $38 billion due to blackouts, and $6 billion due to dryouts. Moreover, this study shows that electricity outages are causing sales losses equivalent to $82 billion a year. Firms are also incurring the costs of self-generated electricity, estimated to amount to $64 billion a year (including annualized capital expenditure). At almost $300 billion a year, these figures highlight the substantial drag that unreliable infrastructure imposes on firms in developing countries. Yet, these figures are likely to be under-estimates as neither all countries nor all types of impacts are covered.

Keywords: Energy Policies&Economics; Transport Services; Hydrology; Electric Power; Employment and Unemployment (search for similar items in EconPapers)
Date: 2019-06-17
New Economics Papers: this item is included in nep-ene
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://documents.worldbank.org/curated/en/33637156 ... loping-Countries.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:8899

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().