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The impact of electricity shortages on firm productivity : evidence from Pakistan

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  • Grainger,Corbett Alden
  • Zhang,Fan

Abstract

Power shortages present a significant challenge to manufacturers, who rely on power as a key input to production. In Pakistan, power shortages are commonplace, but empirical evidence on the impact of shortages is still lacking. Using a survey of 4,500 manufacturing firms for the year 2010-11, this paper estimates the impact of electricity shortages on firm productivity in Pakistan. The analysis finds that a 10 percent increase in the duration of outages on average leads to a 0.14 percent decrease in a firm's total revenue and a 0.36 percent decrease in the value added, all else being equal. There is heterogeneity in the impacts of shortages across sectors: the industries that are most energy-intensive, such as manufacturers of metal, wood, and paper, are affected the most severely by shortages.

Suggested Citation

  • Grainger,Corbett Alden & Zhang,Fan, 2017. "The impact of electricity shortages on firm productivity : evidence from Pakistan," Policy Research Working Paper Series 8130, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8130
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    Citations

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    Cited by:

    1. Edwin Teye Sosi & Philip Akrofi Atitianti, 2021. "How constraining are electricity fluctuations to Ghanaian firms’ performance?," SN Business & Economics, Springer, vol. 1(11), pages 1-23, November.
    2. Stephie Fried & David Lagakos, 2023. "Electricity and Firm Productivity: A General-Equilibrium Approach," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 67-103, October.
    3. Grainger, Corbett A. & Zhang, Fan, 2019. "Electricity shortages and manufacturing productivity in Pakistan," Energy Policy, Elsevier, vol. 132(C), pages 1000-1008.
    4. Wang, Hui & Zhang, Yunyun & Lin, Weifen & Wei, Wendong, 2023. "Transregional electricity transmission and carbon emissions: Evidence from ultra-high voltage transmission projects in China," Energy Economics, Elsevier, vol. 123(C).
    5. Pham, Huy & Ha, Van & Le, Hanh-Hong & Ramiah, Vikash & Frino, Alex, 2024. "The effects of polluting behaviour, dirty energy and electricity consumption on firm performance: Evidence from the recent crises," Energy Economics, Elsevier, vol. 129(C).
    6. World Bank Group, "undated". "Africa's Pulse, No. 17, April 2018," World Bank Publications - Reports 29667, The World Bank Group.
    7. Elliott, Robert J.R. & Nguyen-Tien, Viet & Strobl, Eric A., 2021. "Power outages and firm performance: A hydro-IV approach for a single electricity grid," Energy Economics, Elsevier, vol. 103(C).

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