The type of power capacity matters for economic development
- We examine the relationship between different types of power investments and regional economic dynamics. We construct a novel panel dataset combining data on regional GDP and power capacity additions for different technologies between 1960 and 2015, which covers 65% of the global power capacity that has been installed in this period. We use an event study design to identify the effect of power capacity addition on GDP per capita, exploiting the fact that the exact amount of power capacity coming online each year is determined by random construction delays. We find evidence that GDP per capita increases by 0.2% in the 6 years around the coming online of 100 MW coal-fired power capacity. We find similar effects for hydropower capacity, but not for any other type of power capacity. The positive effects are regionally bounded and stronger for projects on new sites (green-field). The magnitude of this effect might not be comparable to the total external costs of building new coal-fired power capacity, yet our results help to explain whyWe examine the relationship between different types of power investments and regional economic dynamics. We construct a novel panel dataset combining data on regional GDP and power capacity additions for different technologies between 1960 and 2015, which covers 65% of the global power capacity that has been installed in this period. We use an event study design to identify the effect of power capacity addition on GDP per capita, exploiting the fact that the exact amount of power capacity coming online each year is determined by random construction delays. We find evidence that GDP per capita increases by 0.2% in the 6 years around the coming online of 100 MW coal-fired power capacity. We find similar effects for hydropower capacity, but not for any other type of power capacity. The positive effects are regionally bounded and stronger for projects on new sites (green-field). The magnitude of this effect might not be comparable to the total external costs of building new coal-fired power capacity, yet our results help to explain why policymakers favor coal investments for spurring regional growth.…
| Author details: | Lorenzo MontroneGND, Jan Christoph SteckelORCiDGND, Matthias KalkuhlORCiDGND |
|---|---|
| DOI: | https://doi.org/10.1016/j.reseneeco.2022.101313 |
| ISSN: | 0928-7655 |
| Title of parent work (English): | Resource and energy economics |
| Subtitle (English): | evidence from a global panel |
| Publisher: | Elsevier |
| Place of publishing: | Amsterdam |
| Publication type: | Article |
| Language: | English |
| Date of first publication: | 2022/05/26 |
| Publication year: | 2022 |
| Release date: | 2024/01/05 |
| Tag: | Economic growth; Electricity sector; Energy and development; Public infrastructure; Public investments |
| Volume: | 69 |
| Article number: | 101313 |
| Number of pages: | 17 |
| Funding institution: | German Federal Ministry of Education and Research (BMBF) [01LA1828B] |
| Organizational units: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften |
| Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften / Fachgruppe Volkswirtschaftslehre | |
| DDC classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| 6 Technik, Medizin, angewandte Wissenschaften / 62 Ingenieurwissenschaften / 620 Ingenieurwissenschaften und zugeordnete Tätigkeiten | |
| Peer review: | Referiert |
| Publishing method: | Open Access / Hybrid Open-Access |
| License (German): |  CC-BY - Namensnennung 4.0 International |
