Does Electrification Really Cause Economic Growth?

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Villages brightened from 2001 (L) to 2011 (R). Images: Burlig & Preonas / NOAA

Electrification is associated with a seemingly endless list of social and economic goods. Nations that use more power tend to have increased income levels and educational attainment and lower risk of infant mortality, to name but a few. So I was baffled to stumble across a pair of economic analyses on electrification in India and Kenya, posted last month, that cast serious doubt on what has long assumed to be a causal link between the glow of electricity and rural development.

“It is difficult to find evidence in the data that electrification is dramatically transforming rural India,” concludes Fiona Burlig, a fourth-year UC Berkeley doctoral student in agricultural and resource economics who coauthored the India study. “In the medium term, rural electrification just doesn’t appear to be a silver bullet for development.” Continue reading