Reforming the power sector in transition: Do institutions matter?

This paper aims to investigate the often poorly explored link between power sector reforms and wider institutional reforms in the economy across different groups of transition countries. We use panel-data econometrics based on bias corrected dynamic fixed effect analysis (LSDVC) to assess the impact of reforms on macroeconomic and power sector outcomes. The results indicate that power sector reform is highly inter-dependent with wider reforms in other sectors of the economy. The findings indicate that failure to harmonize inter-sector reforms leads to power sector reform measures being ineffective. We conclude that the success of power sector reforms in developing countries largely depend on the extent to which they synchronize inter-sector reforms in the economy.

► We use the 'Transition Indicators' developed by EBRD that measure the progress in transition countries through a set of indicators. ► We use panel-data econometrics based on LSDVC to assess the impact of reforms on macroeconomic and power sector outcomes. ► The results indicate that power sector reform is highly inter-dependent with wider reforms in other sectors of the economy. ► The success of reforms in developing countries can depend on the extent to which they synchronize inter-sector reforms in the economy.