Power outages and economic growth in Africa

Abstract

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.