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A Quarter Century Effort Yet to Come of Age: A Survey of Electricity Sector Reform in Developing Countries

More than two decades have passed since the start of the worldwide market-oriented electricity sector reforms. The reforms have varied in terms of structure, market mechanisms, and regulation. However, the passage of time calls for taking stock of the performance of the reforms in developing countries. This paper surveys the empirical literature on electricity sector reforms and draws some conclusions with a view to the future. Overall, the reforms have tended to improve the technical efficiency of the sector. The macroeconomic benefits of reforms are less clear and remain difficult to identify. Also, the gains from the reforms have often not trickled down to consumers because of institutional and regulatory weaknesses. In order to achieve lasting benefits, reforms need to adopt measures that align their pursuit of economic efficiency with those of equity and provision of access. Reforms can deliver more economic benefits and alleviate poverty when the poor have access to electricity. New technologies and institutional capacity building can help improve the performance of reforms.

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Energy Specializations: Energy Access – Energy Poverty and Equity; Energy and the Economy –Economic Growth and Energy Demand; Renewables – Policy and Regulation; Electricity – Generation Technologies; Electricity – Transmission and Network Management; Electricity – Markets and Prices

JEL Codes:
Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q52 - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
Q2 -
D44 - Auctions
D42 - Market Structure, Pricing, and Design: Monopoly

Keywords: Energy, Reform, Efficiency, Poverty

DOI: 10.5547/01956574.38.3.tjam

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Published in Volume 38, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.