Political considerations relevant to energy and economic growth

Abstract

The purpose of this document is to “To undertake a rapid desk based study to identify evidence on institutional/political considerations linking large scale energy investments and economic growth to inform a DFID research project”.

This review is based on DFID’s draft Business Proposition: Energy and Economic Growth in Low Income Countries (EEG), and is intended to inform the preparation of a more detailed Business Case. Specific comments on the business proposition have been made available in a separate document.

The review finds a huge literature on the topic political economy and energy. The relative dearth of “academic literature” on some of these issues is amply made up with the literature from “practitioners”. The conventional wisdom now frequently explains the relative lack of progress in the world of energy sector reform, the rationalisation of prices and subsidies, and the desired shift to low carbon energy in terms of the constraints of ‘political economy’ rather than due to other more traditional explanations. All energy systems, whether predominantly in the public or private sector, need some form of regulation and are subject to important tax and subsidy regimes, all of which are associated with lobbying, rent seeking and winners and losers.

This report has been produced by the Policy Practice Limited for Evidence on Demand with the assistance of the UK Department for International Development (DFID) contracted through the Climate, Environment, Infrastructure and Livelihoods Professional Evidence and Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by DAI (which incorporates HTSPE Limited) and IMC Worldwide Limited.

Citation

Political considerations relevant to energy and economic growth

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