12 To relate access indicators to reform policies, we calculated averages for different groups of countries according to the status of their reform implementation. In all sectors, countries that established an IRA and introduced private participation have higher average access than countries that did not implement either of these policies (Table 4, columns 1 and 4). We can also look at the average access of countries that decided to implement only one of these policies (columns 2 and 3). In electricity, establishing an IRA seems to be more important than introducing private participation when it comes to access. The opposite is observed in telecoms; countries with an IRA have lower access than those with private participation. In water, there seems to be no difference. Overall, ignoring the fact that each group may reflect a selection bias, the story that emerges is that reforms helped the access performance across sectors.

**<u>Table 4 Access vs. reform policies in 2002</u>**

||**( **<br>|**standard deviati**<br>|**Average**<br>**on; number of o**<br>|**bservations)**<br>||
|---|---|---|---|---|---|
||**1**<br>|**2**<br>|**3**<br>|**4**<br>|**5**<br>|
||**Without IRA**<br>**Without PPI**|**With IRA**<br>**Without PPI**|**Without IRA**<br>**With PPI**|**With IRA**<br>**With PPI**|**All**<br>**countries**|
|Energy use (kg of oil<br>equivalent per capita)|1,249<br>(1,255; 36)|1,769<br>(1,511; 22)|632<br>(500; 3)|1,271<br>(1,116; 30)|1,362<br>(1,272; 91)|
|Telephone<br>subscribers/1,000<br>people|154<br>(206; 26)|161<br>(189; 40)|242<br>(201; 15)|363<br>(347; 47)|243<br>(276; 128)|
|Access to improved<br>water sources<br>(percent of population)|71<br>(19; 63)|81<br>(13; 7)|81<br>(18; 22)|77<br>(22; 9)|77<br>(19; 138)|

Source: Authors’ calculations using data from WDI, ITU, and WHO. Note: For some indicators, coverage in 2002 is not as good as for previous years. Thus, for some groups samples are too small to draw significant conclusions. IRA refers to the existence of an independent regulatory agency, PPI refers to the existence of private participation.

# **4.3 Econometric analysis**

The econometric results are provided in Table 5. The best model in terms of the R–squared is the one for telecoms. The worst one is for water, even after accounting for the fact that there is a strong demand for water for irrigation (proxied by the addition of agricultural value added as an explanatory variable). The sample size for that sector is also significantly lower than for the other sectors.

The econometric results nuance the “naïve” impressions that could be drawn from Table 4. They show that the effectiveness of reforms depends on the sector and on the reform. The marginal effects reported at the bottom of the table show that the effect of corruption on access varies by sector. Of particular interest are the statistical significance and the sign of the marginal effects.

Keeping in mind that these are average effects for a wide range of countries, the initial story is sobering. Increasing PPI in telecoms had the expected effect of increasing access. However, in electricity and in water, it did not have a statistically significant effect during the period of analysis, contrary to the impression left by the basic data analysis (Table 5, line 16).