Does macroeconomic instability hamper access to electricity? Evidence from developing countries

Abstract

A large body of literature argues that macroeconomic stability is a prerequisite for the sustainable development of economies. Moreover, it is also recognized that the most dynamic economies do not necessarily grow faster than others in good times, but they do manage to be more resilient and limit the extent of a downturn in bad times. Therefore, this study draws on this theoretical framework to examine the effect of macroeconomic instability on access to electricity in developing countries. We find that macroeconomic instability reduces access to electricity for the total urban and rural populations. In addition, macroeconomic instability increases the access gap between urban and rural populations in terms of electricity access. However, the adverse effect of macroeconomic instability on access to electricity is more pronounced in oil exporting countries. However, democracy mitigates this deleterious effect of macroeconomic instability on access to electricity. Based on these results, several policy recommendations are discussed in this paper.