Effects of Improving Infrastructure Quality on Business Costs : Evidence from Firm-Level Data
Economic development is affected by infrastructure services in both volume and quality terms. However, the quality of infrastructure is relatively difficult to measure and assess. The current paper, using firm-level data collected by a business env...
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| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/03/9293279/effects-improving-infrastructure-quality-business-costs-evidence-firm-level-data http://hdl.handle.net/10986/6492 |
| Summary: | Economic development is affected by
infrastructure services in both volume and quality terms.
However, the quality of infrastructure is relatively
difficult to measure and assess. The current paper, using
firm-level data collected by a business environment
assessment survey in 26 countries in Europe and Central
Asia, estimates the marginal impacts on firm costs of
infrastructure quality. The results suggest that the
reliability or continuity of services is important for
business performance. Firm costs significantly increase when
electricity outages occur more frequently and the average
outage duration becomes longer. Similarly, increased hours
of water supply suspensions also reduce firms'
competitiveness. In these countries, it is found that the
total benefit for the economy from eliminating the existing
electricity outages ranges from 0.5 to 6 percent of gross
domestic product. If all water suspensions are removed, the
economy could receive a gain of about 0.5 to 2 percent of
gross domestic product. By contrast, the quality of
telecommunications services seems to have no significant impact. |
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