Multilateral and bilateral aid policies and trends in the allocation of electrification aid, 1970–2001

• We examine the history of multilateral aid agencies' electrical infrastructure policies.
• We use data on 3745 multilateral and bilateral electrification aid projects.
• Electrification aid by the 1990s moved toward relatively poorer countries.
• Electrification aid by the 1990s moved toward countries with better governance.
• These changes reflected sector liberalization policies favored by the World Bank.

One of the greatest challenges facing developing countries is gaining access to the capital necessary to achieve widespread electrification, and for this aid is essential. We examine the history of World Bank and other aid agencies' policies in fostering electrification around the world. A dataset comprised of 3745 multilateral and bilateral electrification aid projects is used to evaluate the determinants of such aid in the last three decades of the 20th century. Our major finding is that electrification aid by the 1990s had moved toward relatively poorer countries, except for those in Africa, and toward countries with better governance structures. Increased aid also flowed to countries that had restructured their electric power sector, likely reflecting the liberalization and privatization policies promoted by the World Bank and other aid donors from the mid-1980s onwards.