An Econometric Assessment of the Effects of Electricity Market Reform on Bangladesh Economy

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Revisiting Electricity Market Reforms: Lessons for ASEAN and East Asia


The supply of reliable and affordable electricity has become impera-tive in most production and household activities in modern society. No country has progressed after subsistence extent without guaranteeing the least electricity level. Many developing and emerging countries have started implementing reform initiatives around the electricity market since the 1990s. The major developments in reforming countries are structural changes and privatisation of electricity and energy utilities. Bangladesh is also no exception to this trend. Realising the significance of the electricity sector as the lifeblood of industrial and economic development, the country also took multiple strides towards developing the sector by restructuring key power companies, creating independent regulatory bodies, and promoting private sector firms to enter the electricity market. However, to our knowledge, no literature focuses on the impact of the electricity market reform (EMR) in Bangladesh through the lens of privatisation, competition, and regulation. Addressing the research gap and discussing the reform initiatives critically, this chapter aims to empirically analyse the effects of the EMR on the energy sector development and macroeconomic stability of Bangladesh with the help of a time-series data set covering 1980-2019. We use standard and robust unit root and cointegration tests for empirical analysis. For the long-run estimation purpose, we use the dynamic OLS method. The results of our study can help policymakers adopt effective policies for sustainable development in Bangladesh.

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