Coal-fired power plants and industrial development

Leonard Missbach, Jan Christoph Steckel, Sebastian Renner and Sebastian Kraus

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Past periods of industrial development have gone hand in hand with the burning of coal, but there is little evidence on the effects of coal infrastructure on manufacturing growth in today's industrializing economies. We quantify the direct and indirect effects of coal-fired power plant commissioning on local incumbent manufacturing firms in Indonesia during a coal phase-in period between 1984 and 2015. We analyze spatially and temporally explicit manufacturing and power plant data in a stacked difference-in-difference framework. Leveraging quasi-random variation in treatment timing, we show that coal-fired power plants have led incumbent larger firms to increase employment, inputs, and outputs. In contrast, smaller firms remained unaffected. We identify mediating channels including improved electricity supply and transportation infrastructure, and increased competition for labor. Ongoing efforts to reduce global coal capacity need to take such effects into account.

Keywords: Coal; Manufacturing; Industrialization; Indonesia; Difference-in-difference (search for similar items in EconPapers)
JEL-codes: C55 L60 O12 O14 O53 Q40 R11 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-dev, nep-ene and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:300209

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