estimated overall economic gain of about US$ 2.84 billion, roughly corresponding to 5% of GDP (United Nations Environment Programme, no date).

# 3. Infrastructure provision is not enough: Quality and reliability matter

The evidence reviewed in the previous section focuses on infrastructure provision and investments, and thus explores the role of infrastructure availability. However, the _quality and reliability_ of infrastructure also plays a key role in all prominent assessments of competitiveness. The Global Competitiveness Report by the World Economic Forum (WEF, 2018), the Doing Business reports and the Enterprise Surveys (ES) by the World Bank (2018a, 2018b), and the Business Environment and Enterprise Performance Survey by the European Bank for Reconstruction and Development and the World Bank (EBRD, 2018) – they all place a strong emphasis on the quality of public infrastructure. In addition to considering a wide range of factors, such as technical capacity, administrative obstacles, regulation, governance, and transparency, these assessments score the reliability and service quality of key infrastructure such as transport, electricity, water, and telecommunications.

## **Higher infrastructure quality is associated with higher productivity**

In a comprehensive review of the literature, Dethier, Hirn, and Straub (2011) examine the impact of business climate on productivity and growth in developing countries. They show that there are several key variables – including infrastructure quality – that have a significant impact on firm performance.

For 26 countries across Africa, Escribano, Guasch, and Pena (2010) assess the impact of infrastructure quality on total factor productivity of manufacturing firms between 1999 and 2005. They focus on the quality of various infrastructure services, including customs clearance, energy, water, sanitation, transportation, telecommunications, and information and communications technology. Overall, they confirm that productivity is, among other factors, determined by infrastructure quality. However, they also show that different infrastructure types matter more in some countries than in others. Low‐quality electricity, measured by several power supply and outage frequency indicators, reduces log productivity in Zambia by 34.1% on average, but only by 0.3% in Morocco. This difference is likely driven by a lower overall influence of infrastructure on productivity in the Moroccan economy and a higher reliability of the Moroccan power grid.

Similar effects have been shown for garment and food‐processing firms in the Kyrgyz Republic, Moldova, Poland, Tajikistan, and Uzbekistan (Bastos and Nasir, 2004). Using Enterprise Survey data for eight countries in Eastern Europe, Anos‐Casero and Udomsaph (2009) show that over the period 2001 to 2004, an increase of one standard deviation in infrastructure quality, measured by an indicator combining information on power and water outages as well as mainline telephone disruptions, raises the total factor productivity of the average firm by 9.8%.

## **More reliable electricity supply can increase output and productivity**

Empirical studies for a large number of countries have shown that power supply irregularity can have substantial adverse impacts on the productivity and sales of firms. These studies are reviewed in this section and are summarized in _Figure 2_ . A detailed overview of studies is offered in the Annex, providing the case study country, the type of firms considered in the analysis, details on the power supply quality indicator, methodology, and the estimated effect of power supply irregularity on different indicators of firm performance.

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