Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance

Vast amounts of financial resources and effort have driven by ideology, economic reasoning, and early success stories been spent on reforming infrastructure industries in developing countries. It is, therefore, important to examine whether evidence supports verifies the logic of reforms. This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions and sector governance play an important role in success and failure of reform. Also, reforms also appear to have increased operating efficiency and expanded access to urban customers. However, they have to a lesser degree have passed on efficiency gains to customers, tackled distributional effects, or improved rural access. Moreover, some of the literature is not methodologically robust and on par with general development economics literature. Further, findings on some issues are limited and inconclusive while other important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence.