Abstract
National regulatory agencies (NRAs) have recently been set up in several Mediterranean countries with the aim of increasing infrastructure investments and converging toward a harmonized regulatory framework with Europe. Our study empirically investigates the impact of the presence of independent regulatory bodies on the growth of electric generation capacity for a sample of 12 MENA countries (Algeria, Djibouti, Egypt, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, and Yemen) from 1990 to 2011. We find that inception of a regulatory agency has a positive impact on capacity growth and, although the setup of the NRA is influenced by the quality of the institutional environment, the impact survives when we control for sociopolitical factors. Our results suggest that independent regulatory agencies may act as a catalyst for a number of positive effects generated by the quality of political institutions.
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