Hidden Economic Opportunities
What’s the greatest limitation to a nation’s economic productivity? Data from the World Bank shows that energy is the leading barrier to a nation’s productivity.
Electrification rates rise steeply as countries move through the income bracket of $500-$1,000 per capita GDP. It intuitively makes sense that a country’s economic potential is highly correlated with its energy access — energy is an input to nearly every good and service, so when people make things or import/export more services, people need more energy. As emerging markets around the world become increasingly productive, energy systems must be in place to support economic growth and ensure that growth isn’t prematurely stunted.
Energy access is thus one of the most significant factors for economic growth and quality of life. According to USAID, people who have access to electricity have a 64% increase in household income. According to the UN, in East Africa, 36% of the households that had recently installed an off-grid solar system increased average income by 50%. According to the African Development Bank, Africa’s power outages sap up to 4% of its GDP growth every year.
Energy investment, unlike forms of highly-criticized “aid,” is self-sustaining, because it increases economic productivity faster than it increases debt burdens. More energy leads to more economic productivity…
