WHEN THE LIGHTS GO OUT: POWER OUTAGE AND FIRM PERFORMANCE IN DEVELOPING COUNTRIES
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Date
2026
Authors
Addisu A. Lashitew
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
Severe power outages are widespread in developing countries and can significantly undermine firm performance. This study examines their effects using data from the World Bank Enterprise Surveys (WBES), covering 63,200 manufacturing establishments across 121 developing countries between 2006 and 2019. The results indicate that power outages have different effects on firms that generate their own electricity and those that do not. In response to greater power outages, firms with in-house electricity generating capacity produce a larger share of their own electricity, and subsequently spend more on fuel expenses, but they fail to eliminate revenue losses from power outages. Analysis using difference-in-differences estimation further shows that the adverse effects of power outages are more pronounced in energy-intensive industries regardless of in-house power generation status. This effect is also greater among smaller firms than it is for medium and large enterprises. The results remain robust when alternative specifications are estimated that use different measures of power outage and energy intensity.