Power outages and economic growth in Africa

This paper estimates the total effect of power outages on economic growth in Sub-Saharan Africa over the period 1995-2007. We pay close attention both to potential errors of measurement of African economic growth and to the endogeneity of outages. As suggested by Henderson et al. (American Economic Review 102(2): 994-1028, 2012), we combine Penn World Tables GDP data with satellite-based data on nightlights to arrive at a more accurate measure of economic growth. Following Andersen et al. (Review of Economics and Statistics 94(4): 903-924, 2012), we also employ lightning density as an instrument for power outages. Our results suggest a substantial growth drag of a weak power infrastructure in Sub-Saharan Africa.

► We estimate the total effect of power outages on economic growth in Africa. ► We find a substantial impact. ► Solving Africa's power crisis is important.