midyear population according to the World Bank’s World Development Indicators 2011. Costs are recorded exclusive of value added tax and only include the fees associated with completing the procedures to connect a warehouse to electricity. This includes the costs in related to obtaining clearances from government agencies, applying for the connection, receiving inspections of both the site and the internal wiring, purchasing material, getting the actual connection works and paying a security deposit<sup>7</sup> . Costs associated with electricity consumption are not included. Information from local experts and specific regulations and fee schedules are used as sources for costs. If several local partners provide different estimates, the median reported value is used. In all cases, the cost excludes bribes.

Cost estimates for 86 economies also include the present value of the lost interest earnings on the security deposits that utilities require as a guarantee against the possible failure of customers to pay their consumption bills. Instead of recording the full amount of the guarantee, we record the present value of the losses in interest earnings experienced by the customer because the utility holds the security deposit over a prolonged period. In most cases this is until the end of the contract (assumed to be after 5 years)<sup>8</sup> . To calculate the present value of the lost interest earnings, the end2010 lending rates from the International Monetary Fund’s International Financial Statistics are used. In cases in which the security deposit is returned with interest, the difference between the lending rate and the interest paid by the utility is used to calculate the present value.

In some economies the security deposit can be put up in the form of a bond wherein the company can obtain from a bank, or an insurance company, a guarantee issued on the assets it holds with that financial institution. In contrast to the scenario in which the customer pays the deposit in cash to the utility, in this scenario the company does not lose control over the full amount and can continue using it. In return, the company will pay the bank a commission for obtaining the bond. The commission charged may vary depending on the credit standing of the company. In any case, we assume that the best possible credit standing and thus the lowest possible commission. Where a bond can be put up, the value recorded for the deposit is the annual commission times the 5 years assumed to be the length of the contract. If both options exist, the cheaper alternative is recorded.

We also use, as an aggregate indicator, the relative rank of a given country on the process of obtaining an electricity connection. In order to calculate the rank, we aggregate the three sub-

> 7 Connection costs can be broadly divided into the following categories: often utilities charge a fixed connection fee that spreads the fixed costs of operating a distribution grid over all customers; in addition, customers are required to pay for the variable costs for each connection, including labor and material costs. Sometimes the costs also include fees for inspections that the utility or outside contractors are legally required to carry out. In many economies costs also include payments to other agencies for permits, inspections and approvals.

> 8 In the few cases in which the security deposit is used to cover the first monthly consumption bills, it is not recorded at all.

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