Publication - Project Report
Existing research suggests large long-run economic effects of electrification (Lipscomb et al 2013; Rud 2012). However, recent experimental research calls into questions the assumption that electrification alone leads to economic growth and improved development outcomes (Lee et al 2018; Aklin et al 2017). It could be that electricity leads to economic growth only when it catalyses a broader structural transformation, shifting local economies from subsistence agriculture to more productive economic activities (Fried and Lagakos 2017). Using a randomised field experiment, we investigate how this structural transformation takes place at a micro-level in trading towns throughout Sierra Leone where solar mini-grids have recently been constructed. Working with a commercial partner, we set up electricity powered agricultural processing facilities – such as maize and cassava processors— in a subset of these town. We then study complementary effects to small scale electricity users offered by three interventions:
Rural electrification is high on the policy agenda of many developing countries, including Sierra Leone. This study provides policymakers with evidence about tools at their disposal to nudge local economies towards productive use of electricity and structural transformation. In addition, we believe the results of this study will be of interest to private energy firms looking for models on how to stimulate local demand for electricity.