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NO. 1

Autumn 2015

The Journal of Energy and Development
volume 41, number 1, autumn 2015 (copyright 2016)

Lika Ba and Farid Gasmi, “To What Extent Do Infrastructure and Financial Sector Reforms
Interplay? Evidence from Panel Data on the Power Sector in Developing Countries,” The Journal of
Energy and Development, volume 41, number 1 (autumn 2015, copyright 2016), pp. 1-30.

This paper explores the empirical link between infrastructure sectors and financial systems reforms, the
effects of which are reflected in the infrastructure industries’ performance. We investigate the impact of
four important components of the power sector reforms in developing countries on some of this sector’s
performance outcomes and assess the contribution of the domestic financial systems to these outcomes.
The power sector reform policies examined are the unbundling of generation, transmission, and
distribution, the introduction of competition typically coupled with the implementation of privatization
programs in the generation and distribution segments, and the creation of an independent energy
regulatory authority. In a dataset on 42 developing countries covering the 1990-2005 period, we find that
private participation in generation and distribution has improved power supply and operational efficiency
as reflected in higher electricity generation per capita, greater labor productivity, lower distribution losses,
and better coverage. The creation of a separate regulatory agency is also found to have enhanced the
sector’s performance in terms of actual output, labor productivity, and coverage. Interestingly, we find
that the effects of the unbundling of generation, transmission, and distribution segments, and the creation
and experience of an autonomous regulator have been exacerbated by the modernization of the financial
systems. In particular, deeper and more liquid financial markets have eased access to long-term financing
for operators allowing them to upgrade their networks and, hence, to increase output, decrease power
losses in distribution, and increase labor productivity and access. Overall, the results of this empirical
analysis suggests that developing countries that have implemented reforms that deepen most their
domestic financial systems have been able to tap more of the potential benefits from their infrastructure
sectors’ reforms.

Keywords: developing countries, power sector reform, unbundling, privatization, competition, regulation,
financial sector development, power sector performance, panel data analysis

Moayad Al Rasasi and Waheed A. Banafea, “The Effects of Oil Shocks on the Saudi Arabian
Economy,” The Journal of Energy and Development, volume 41, number 1 (autumn 2015, copyright
2016), pp. 31-46.

This paper aims to empirically investigate the differential effects of oil shocks on economic activity,
inflation, and the nominal exchange rate in Saudi Arabia. The measures of oil shocks utilized by Kilian
(2009) were adopted. The findings showed evidence of a temporary, positive, and statistically significant
impact of an oil supply shock on economic activity. Additionally, the results of impulse response function
testing indicated that there is a temporary, positive, and statistically significant impact of an aggregate
demand shock on inflation. The effect of all the structural oil shocks on the nominal exchange rate was
negative and statistically insignificant. According to these findings, it is possible for policy makers in
Saudi Arabia to adopt inflation-targeting techniques to stabilize the economy.
Keywords: oil shocks, industrial production, inflation, nominal exchange rate, Saudi Arabia

Pedro Uetela and Franklin Obeng-Odoom, “Natural Gas and Socio-Economic Transformation in
Mozambique: Some Preliminary Evidence,” The Journal of Energy and Development, volume 41,
number 1 (autumn 2015, copyright 2016), pp. 47-66.

While it has been argued that the development of fossil fuels has been either beneficial (“a blessing”)
or harmful (“a curse”) to African societies and economies, this article shows that Mozambique seems to
be experiencing both outcomes simultaneously. Melding the Staples and Linkages approaches developed
by Innis and Hirschman, respectively, this work shows that the beneficial outcomes of economic and
social change are neither necessarily linked to nor derived from the activities of the state, but the
destructive outcome is quite central to the economic progress measured mainly in growth terms. If the
social change registered in Mozambique is fairly independent of the economic processes that generate
growth, as the evidence suggests, then state support ought to be enhanced to promote wider and more
enduring linkages in the Mozambican economy. From this perspective, there is much more the state can
do than merely allowing “the invisible” hand of the market to operate.

Keywords: Natural gas development, fossil fuels, Mozambique, socio-economic policy

Hodjat Ghadimi, “Sustainable Economic Development Planning in Energy Rich Regions,” The
Journal of Energy and Development, volume 41, number 1 (autumn 2015, copyright 2016), pp. 67-

Energy rich regions (ERRs) are crucial to the growth of the world economy because of their production
of the world’s energy and the substantial investments this production attracts. There is a growing interest
for an appropriate framework for analyzing sustainable economic development in ERRs and an
understanding of the national and global implications of such regional development paths. This paper
outlines a general framework for developing ERRs based on the constancy of total capital stock and offers
a novel approach to conceive of the development of ERRs in a global context. With a brief review of
development challenges of ERRs, the article highlights advantages of using a regional approach to
analyze sustainable development issues in energy rich economies, proposes a general pattern for the
development and stages of growth in ERRs, and outlines a multidimensional comprehensive knowledge
base for qualitative and quantitative analyses of sustainable development in these regions within a global

Keywords: regional development, energy, environment, sustainable development, energy rich regions, oil,
gas, natural capital, physical capital, human capital, development pattern

Paul Adjei Kwakwa and George Adu, “Effects of Income, Energy Consumption, and Trade
Openness on Carbon Emissions in Sub-Saharan Africa,” The Journal of Energy and Development,
volume 41, number 1 (autumn 2015, copyright 2016), pp. 85-118.
This paper examines the effects of income, energy consumption, and trade openness on carbon
emissions for 19 Sub-Saharan African (SSA) countries using the panel cointegration technique. The panel
unit root test results show that all the variables are integrated of the order one and, thus, are nonstationary
in their levels. A test for long-run equilibrium relationships revealed the presence of a cointegrating
relationship among the variables. We find evidence of the existence of the environmental Kuznets curve
hypothesis for the SSA region with estimated turning point values ranging from U.S. $1,142.85 to U.S.
$5,687.09. We also find evidence of nonlinearity in the relationship between trade and emissions. The
findings imply that both sustained economic growth and increased openness have the potential to reduce
emissions in the long run while a reduction in energy consumption and urbanization reduces carbon

Keywords: Environmental Kuznets Curve (EKC), pollution haven effects, energy, income, trade, Sub-
Saharan Africa, FMOLS, cointegration, carbon dioxide (CO2) emissions, panel data

Jack Fuller and Matthew Robinson, “Fluidized Bed Industry Benchmarking: A Five-Year Review,”
The Journal of Energy and Development, volume 41, number 1 (autumn 2015, copyright 2016), pp.

Given the many difficult standards and regulations surrounding energy production in the United States,
as well as those that have yet to be implemented, variable fuel costs, climate concerns, and alternative
technologies, industry members find themselves in challenging times. Remaining competitive and
relevant requires efforts on many fronts, including innovations in technology, modeling and analysis
tools, reductions in expenditures, and any other improvements available. For the fluidized bed combustion
(FBC) industry, a benchmark study has been used to evaluate industry performance for the past decade.
The study, in the form of a voluntary survey and data analysis, has allowed for a unique look into
practices and concerns within the industry. Here, survey data taken from year 2011 and its analysis are
shown. In addition, specific pieces of year 2011 data are compared to similar data taken from the past five
years. Trends and consistencies are described when available, and a broad picture of the modern FBC
industry is painted

Keywords: power generation, coal-fired power plants, atmospheric fluidized bed combustion, industry