Electricity and the Wealth of Nations

In his recent Energy in Africa post Euan Mearns made this statement:

One hypothesis I want to examine is that electricity is fundamental to GDP and GDP growth. Without it, individuals cannot create wealth. I was therefore expecting to see that electricity consumption should be correlated with GDP and growth.

There’s no doubt that electricity is fundamental to GDP growth and that wealth in our modern society cannot be created without it, but a key question is; which comes first? Does the electricity create the wealth, or does the wealth create the electricity, or is the linkage between the two so close that it’s impossible to say? This will be the second question this post addresses.

The first will be the question of the correlation between GDP growth and electricity consumption that Euan was expecting to see but which was not visible in the small sample of African countries he reviewed. But again there’s little doubt that such a relationship exists, and a larger sample should reveal it. Accordingly this post expands the sample size to 168 countries in order to determine how strong the relationship is and how it varies from place to place.

The data used in this review are from the following sources: Population data (mostly 2014 and 2015 estimates) are from Wikipedia . Nominal per-capita GPD data (2013 estimates) are from the UN and electricity consumption data (2012 estimates) are from EIA. It should be noted that the numbers in these data sets are not always the same as those published by other sources, such as the World Bank, the IMF and the CIA. I suspect that the impact of using these alternative data sets would be to shuffle the points on the graphs without materially changing the conclusions but am unable to guarantee this.


The Global Picture

Figure 1 compares per capita GDP in US$2013 against per capita electricity consumption in kWh/year for all 168 countries (used as a term of convenience; not all of them are independent countries). There is indeed a fairly strong relationship between the two (R2 = 0.79), but also considerable scatter. The relationship is also clearly stronger for the poorer developing countries than for the richer developed ones, and since wealth creation in the developing countries is the key requirement if the world is to eradicate poverty (a goal of the Kyoto Protocol) this analysis concentrates on the developing countries:

Figure 1: Per-capita electricity consumption vs. per-capita GDP, 168 countries. 

Much of the scatter in Figure 1 is, however, caused by a few outliers that can legitimately be discarded and also by the European countries, which as we shall see behave somewhat differently to those elsewhere in the world. Figure 2 shows the results after the European countries and three outliers (Equatorial Guinea, Montserrat and the Virgin Islands) are deleted. The graph is now a lot cleaner, with R2 increasing to 0.84 and the trend line showing GDP increasing by $5 for every additional kWh of annual consumption:

Figure 2: Per-capita electricity consumption vs. per-capita GDP with European countries and outliers deleted

Figure 2 nevertheless still contains some outliers that are evident only when the data are segregated regionally. The next sections therefore segregate the global data into regions and geographic/economic groups:


Figure 3 plots the data for 53 countries in Africa, the poorest continent. The correlation is unimpressive (R2=0.32) but once more there are a number of outliers, including South Africa, which distinct from the other African countries already has a well-developed electricity sector, Libya, an oil-dependent country effectively in a state of war, Equatorial Guinea, where almost all of GDP comes from oil export revenues and other oil-dependent economies where GDP is similarly skewed by oil exports, such as Gabon, Angola and Nigeria:

Figure 3: Per-capita electricity consumption vs. per-capita GDP, 53 African countries

Deleting these outliers reduces the number of countries to 46 but yields much more consistent results, with R2 increasing to 0.90 (Figure 4). The inclusion of Mauritius and Seychelles, two island nations that have little in common with mainland Africa, is questionable, but R2 remains at 0.81 when they are omitted:

Figure 4: Per-capita electricity consumption vs. per-capita GDP, African countries with outliers deleted

According to the trend line GDP in Africa increases by about $4.50 for every additional kWh of annual consumption, close to the world average.

Southeast Asia:

Figure 5 plots the data for 22 countries in Southeast Asia. The results are again not very encouraging, but they can be divided into five richer countries that show wide scatter and 17 poorer countries that do not:

Figure 5: Per-capita electricity consumption vs. per-capita GDP, 22 Southeast Asian  countries

Two of the poorer countries on Figure 5 – Bhutan and the Maldives – are outliers; Bhutan because it generates a large amount of electricity from hydro plants funded by other countries and the Maldives possibly because of suspect data. Figure 6 plots the results for the 15 countries that remain after deleting Bhutan, the Maldives and the five richer countries. There is now another good correlation (R2=0.90), but in this case GDP increases only by about $2.50 for every additional kWh of annual electricity consumption:

Figure 6: Per-capita electricity consumption vs. per-capita GDP, Southeast Asian countries with outliers deleted

South and Central America

Figure 7 plots the data for the 18 countries in this data set, which contains no rich countries nor any grindingly poor ones and is therefore more consistent than the others. Unique among the data sets it also contains no obvious outliers:

Figure 7: Per-capita electricity consumption vs. per-capita GDP, 18 South and Central American countries

R2 in this case is 0.87 and GDP increases by about $5.00 for every additional kWh of annual electricity consumption.


Islands do not export or import electricity, are spread all over the world and range considerably in wealth. Figure 8 plots the data for 38 of the world’s islands (some of which are included in other categories). One of them – the Cayman Islands – is not representative of the general run of the world’s islands and three others (Montserrat, French Polynesia and the Virgin Islands) have potentially suspect data:

Figure 8: Per-capita electricity consumption vs. per-capita GDP, 38 island countries

Figure 9 replots the data for the 34 islands that remain after discarding these four outliers. R2 is now 0.89 and again each added kWh of annual electricity consumption corresponds to $5 of GDP growth:

Figure 9: Per-capita electricity consumption vs. per-capita GDP, island countries with outliers deleted


The data for 37 European countries are plotted in Figure 10. Iceland, Finland, Sweden and Norway are obvious outliers; Iceland and to lesser extent Norway because of the heavy industry that has gone there to take advantage of cheap hydropower and Sweden and Finland for reasons possibly related to the use of electricity in forestry industries and to the fact that they are downright cold in winter. Luxembourg, whose per-capita GDP is artificially inflated by the many capitas who work there but do not live there, is also non-representative. Switzerland is labeled for reference:

Figure 10: Per-capita electricity consumption vs. per-capita GDP, 37 European countries

Figure 11 plots the data for the 32 countries that remain after deleting Iceland, Finland, Sweden, Norway and Luxembourg. The clear distinction between the 16 Western European countries and the 16 Former East Bloc countries requires that the two be fitted with separate trend lines. But the correlations are modest at best (R2=0.35 for the western countries and 0.51 for the eastern), indicating that little confidence can be placed in the trend line gradients. Taken at face value they show each additional kWh corresponding to $7 of added GDP in Eastern Europe and $28 in Western Europe (although this number is almost certainly not meaningful. The Western Europe trend line gradient probably reflects the political and cultural differences that have become apparent during the ongoing Greek debt crisis as much as anything else.)

Figure 11: Per-capita electricity consumption vs. per-capita GDP, European countries with outliers deleted segregated into Eastern and Western subsets

The Oil Exporters:

Figure 12 plots the data for 18 countries whose economies are heavily dependent on oil exports. Two outliers, Qatar and (again) Equatorial Guinea, are excluded. The R2 value of 0.94 is the highest of any case considered and each kWh of consumption corresponds to about $4 of GDP. Clearly oil does not skew the link between wealth and electricity:

Figure 12: Per-capita electricity consumption vs. per-capita GDP, 18 oil exporting countries

That concludes the data presentation. The results show only a weak relationship between wealth and electricity in the developed nations, but R2 values of around 0.9 testify to the strength of the relationship in the developing nations. Except for Southeast Asia and Europe the trend lines also have gradients of $4 to $5 of GDP per kWh. (There is probably a message in this number but I have not had the time to look into what it might be. It costs a lot less than $5 to generate a kWh of electricity, so one intriguing possibility is that electricity might be acting as a wealth multiplier.)

So now on to the second question:


The graphs presented above do not of course tell us which came first , so I address the question with specific country-by-country examples, again with the emphasis on the developing countries. It is impossible to review all of the 100-plus developing countries in the data base, but the examples presented below allow a conclusion to be reached:

1. Abundant cheap electricity does not necessarily create wealth:

Paraguay is a comparatively poor country that for years has had access to far more electricity than it knows what to do with. The electricity comes from Paraguay’s half share of the output from the massive 14GW Itaipu hydro plant on the Paraná River, which it owns jointly with Brazil. Itaipu began operation in 1984 and reached full production in 1991. Paraguay’s share of Itaipu’s output amounts to an average of about 44TWh a year, roughly four times its present consumption and almost twenty times its 1991 consumption. Has access to this abundant, cheap electricity make Paraguay richer? As shown in Figure 13, it has not. Annual GDP growth since Itaipu reached full production in 1991 has averaged only 1.5% and Paraguay’s constant-dollar per-capita GDP was still the same in 2005 as it was in 1991:

Figure 13: Paraguay’s per capita GDP, electricity consumption and electricity supply available from Itaipu

Why did Paraguay reap no benefit from Itaipu? Basically because it had nothing it could use the power for. Paraguay had no natural resource that it could exploit, nor was it a good place for power-intensive industries because Paraguay is a remote, landlocked country with no ocean access. So what did Paraguay do with the excess electricity? It “exported” it at cut-price rates to Brazil, although none of it touched Paraguayan territory on the way.

On other side of the globe is Bhutan, which also generates about five times as much hydropower as it can use (about 8 TWh/year versus 1.6 TWh annual consumption, according to my data). But this power has done little to enrich the country, which remains mired in poverty with a per-capita GDP on a par with Papua-New Guinea. And because the hydro is all run-of-river there is a massive surplus in the wet season and a deficit in the dry season which results in Bhutan being a net importer of electricity from India.

2. Wealth in the form of natural resources creates electricity:

New Caledonia is the second richest island in the island data set and also the largest per-capita electricity consumer (Figure 8). New Caledonia owes its wealth and high electricity consumption not to cheap and abundant electricity – 96% of it comes from fossil fuel plants that burn imported fuel – but to its enormous nickel reserves and to the large amounts of electricity that are consumed in mining and processing them. New Caledonia is a case where local wealth in the form of a major mineral resource created the electricity. And unless it can diversify its economy its wealth will last only as long as the nickel does.

The Seychelles has the third-highest level of per-capita electricity consumption in Africa and the highest per-capita GDP outside oil-rich Equatorial Guinea (Figure 3 and 4). The Seychelles along with a number of other islands enjoys a different type of wealth – beautiful beaches that attract tourists. And tourists want electric light, internet hookups, television and air conditioning, so if Seychelles wants the tourists to keep coming (they account for 70% of its GDP) electricity must be provided for them. Again the wealth creates the electricity.

3. Economic growth creates electricity in the absence of natural resources:

Mauritius is one of the world’s better-managed developing countries, and while its GDP is still relatively low it continues to grow at a healthy rate even though the island has no oil, gas, coal, minerals, hydro or well-developed tourist sector. Mauritius has achieved this by transitioning from an agriculturally-based to a diversified agricultural, manufacturing and financial services economy, and this transition has resulted in 8-9% annual growth in electricity demand. Mauritius is a particularly clear case of wealth creating electricity rather than the other way round.

4. Wealth and electricity sometimes go hand-in-hand:

Iceland, like Paraguay, also has far more cheap hydropower than it can use but unlike Paraguay has found a use for it – it sells it to aluminum companies that build energy-intensive smelters on the island. In this case the wealth-electricity relationship is symbiotic and it is impossible to say which created which. The refined aluminum would not be produced without the electricity, the electricity would not be generated without the aluminum and the smelters would never have been built in Iceland in the first place if the hydropower had not been there.

Did electricity create China’s wealth?

Figure 14 plots China’s annual electricity generation since 1985 (data from BP) against per-capita nominal GDP (data from the World Bank). The fact that the upturn in electricity generation around 2000 leads the upturn in GDP by about five years and tracks GDP thereafter suggests that the added electricity at least contributed to creating the added wealth, and it’s certainly hard to see how China could have become the world’s leading exporter without it:

Figure 14: Per capita GDP versus electricity generation, China

On the other hand China would not have had the electricity at all without its vast coal reserves, so once again the basic source of wealth was a natural resource that was ultimately converted via mines, power plants, imported raw materials, factories and ships into export earnings. Electricity was a vital link in the chain, but so were all the others. (An intriguing question is whether China’s wealth-creation approach would work in other countries. Would it have worked, for instance, in Botswana, which has arguably as much coal as China and which in the 1990s had a per-capita GPD approximately five times that of China? Probably not, if only because Botswana is another landlocked country with no seaport.)

The conclusion? In developing countries wealth creates electricity and not the other way round. There is no question, however, that once a country gains wealth it cannot sustain it without electricity. When the electricity disappears the wealth goes with it.

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41 Responses to Electricity and the Wealth of Nations

  1. Willem Post says:


    A plot of per capita CONSUMPTION of electricity/$ of real GDP by the modern advanced countries vs time, might be of interest, as it likely would capture about 75% of all electricity consumption, and would reveal trends.

    Even with massive quantitative easing by central banks, PLUS near-zero interest rates, PLUS lower energy prices (due to oversupply), the economies of the world seem not to have enough oomph to grow. Those that were growing fast, now have slower growth, i.e., China, Russia.

    I think people who are “electricity poor” will stay that way, and there likely may be more of them in the future, unless debilitation factors overtake population growth factors. Some of the more energetic likely will migrate, become refugees.

    “When the electricity disappears the wealth goes with it.”

    Electricity is the most versatile necessity to power a modern society.

    The more modern a society, the more electricity is used throughout that society, i.e., its use per capita increases, unless efficiency measures keep that increase to near zero.

    After FFs are used up, the modern societies of the world must have electricity to keep functioning at a high level.

    That electricity, in huge quantities, needs to come from wind, solar and nuclear.

    Hydro, geothermal, wave and tide would be useful in a few places, i.e., would not qualify for worldwide use.

    Bio has too low an ERoEI and takes up too much land, i.e., would not qualify for crowded countries.

    • Roger Andrews says:

      Willem: Plots of consumption vs. GDP over time for developed countries would be instructive but would take a lot of work. I might try it when I have a free moment. Or two.

      • Willem Post says:


        If you selected say 15 similar countries with advanced, modern, industrial economies, it would not be such a big task.

        After that, if results are promising, a less advanced group of such countries could be analyzed.

        Eventually, one starts coming to the “basket” cases, about 150 countries in my opinion, that amount to less than 20% of GWP. Just neglect those.

    • oldfossil says:

      Willem you made an extremely interesting point: “When the electricity disappears the wealth goes with it.”

      Offhand I can think of only one country that has suffered an electricity generation collapse, my own, South Africa, and one that is about to, the UK.

      A study of these two would probably establish the relation between electricity and PCGDP better than the figures for growing capacity given above.

  2. I was undecided on the energy/development/GDP question until 10 minutes ago.

    Thanks for a delightfully clear and thorough presentation – although, as stated in the article, the effects of selection of some outliers do affect the results. The message seems to be that wealth produces more wealth and that electrical power is a necessary adjunct to GDP growth rather than the primary driver.

  3. robertok06 says:

    Hello Roger:

    and thanks once more for a very informative post.

    the statistical method used by those who study this kind of correlations is the “Granger causality test”…. like done on this paper…


    … one can find many such studies on the Energy Policy journal.

    “This paper examines the causal relationship between electricity consumption, exports and gross domestic product (GDP) for a panel of Middle Eastern countries. We find that for the panel as a whole there are statistically significant feedback effects between these variables. A 1 per cent increase in electricity consumption increases GDP by 0.04 per cent, a 1 per cent increase in exports increases GDP by 0.17 per cent and a 1 per cent increase in GDP generates a 0.95 per cent increase in electricity consumption. The policy implications are that for the panel as a whole these countries should invest in electricity infrastructure and step up electricity conservation policies to avoid a reduction in electricity consumption adversely affecting economic growth. Further policy implications are that for the panel as a whole promoting exports, particularly non-oil exports, is a means to promote economic growth and that expansion of exports can be realized without having adverse effects on energy conservation policies.”

    • Roger Andrews says:


      A 1 per cent increase in electricity consumption increases GDP by 0.04 per cent ….and a 1 per cent increase in GDP generates a 0.95 per cent increase in electricity consumption.

      Which one is it?

      • robertok06 says:

        Both… it is bi-directional… and each country has, more or less, its own causation coefficients (if I may call them like this)… there are many studies on Energy Policy similar to this.

        • Roberto: The wealth comes first and the electricity follows because the wealth creates demand for it. Power plants and grids don’t get built in the hope that the wealth will follow because it may never show up. Electricity doesn’t lead, it plays catch-up.

          • John Eardley says:

            Roger: I disagree that wealth comes first.
            Wealth is not some abstract thing that exists in isolation, it has to be earned by the application of science and engineering to the solution of problems and the manufacturing of goods. These goods are what people actually measure their wealth by: cars, planes, roads, TVs, houses, stuff. Just look at at the rapid way the USA was electrified in the late 1800s, leading to an increase in manufactured goods at reduced prices. In particular the USA used small electric motors in its factories to out-compete the old Victorian steam powered plants in the UK. Not because electricity was a more efficient energy source but because it allowed mass production to take place in modular single story factories; the UK being stuck with multi-storey mills not particularly suited to the division of labour. This is what created the wealth in the USA.

          • robertok06 says:

            Well, Roger, it’s not my field of expertise, statistics… but I’d like to point out that this gentleman, Granger, got a Nobel prize for it!…

            There is plenty of cases (countries) where electricity consumption and wealth of the country are Granger-linked, in the sense that one generates the other and/or the other way around. One specific country doesn’t necessarily always have the same direction of the causality relationship, and the latter can also disappear during the years.

            These are not my opinions, I’m simply referring what I’ve read mostly on peer-reviewed publications.


  4. Hugh Sharman says:

    Another masterly and lucid presentation Roger, which I will circulate to colleagues working in this sector!

  5. Askja Energy says:

    Iceland’s wealth has mainly been created by exporting fish and fish products. However, the aluminum smelting industry was important and even necessary for Iceland to build strong transmission grid all around the country and make cheap electricity available to the public. So, the electricity has helped strengthening the Icelandic economy. Today, Iceland faces the possibility of much higher profits by selling electricity through subsea cable to Europe (UK).

  6. Leo Smith says:

    Mmm. There is a theory that I first stumbled across on Gail Tverberg’s blog, along the lines of ‘any system that needs many things to operate, will be limited by the availability of the scarcest one’
    It was originally applied to crops and plants – no point irrigating it there isn’t enough nitrogen, or adding nitrates if there isn’t enough water etc etc.

    I suspect that the same is true of this study. (lack of) electricity is not necessarily a limiting factor beyond a certain point, and the more cash you have the more electricity you are likley to consume,.

    • Javier says:

      That is Liebig’s law of the minimum, from 19th century.


      But energy can be considered the most important factor in the Universe. Nothing takes place without energy, so sufficient affordable energy is absolutely essential to developing a civilization, an economy, an enterprise. Any decrease in available energy or in its affordability must be met with a corresponding contraction of the structures supported by that energy. Efficiency gains however produce higher energy consumption as they increase affordability.

  7. markus says:

    Unfortunately I get non of the images displayed because the image serving website (http://s13.postimg.org/) is blocked by my corporate proxy. I happen to be consulting from one large corporation at another and the image host is blocked in both corporations.

    This makes the article useless to us behind a corporate proxy.

  8. Teo says:

    Dear Euan,

    Great issue you chose to analyse.
    The first time I have noticed it was in Caves of Steel , by Asimov, some decades ago. You walk into the footstepsof giants.
    Power, ability to do things, standard of living etc are connected to energy consumption in general and electricity in particular.

    I have something to add.
    There is an almost perfect correlation between energy/electricity consumption and GDP. You just have to use PPP GDP.
    You will also see the world pecking order. Military power. Living standards. Etc.

    Of course , some adjustments have to be made.
    For ex., Japan seems to be matched with Russia according to PPP GDP and electricity consumption.
    Different economic structures explain why Russia has a very large surplus of power( or electricity if you want) to do various things like space programs, while Japan does not have any electricity ( power) surplus or very little.

    • There is an almost perfect correlation between energy/electricity consumption and GDP. You just have to use PPP GDP.

      Well, I tried it for Africa and there wasn’t. The correlation was the same as it was for nominal GPD. The ratio of $GDP to kWh consumption increased from $5 nominal to $9 PPP, but PPP dollars aren’t real dollars. You can’t use them to buy power plants.

  9. A C Osborn says:

    There are certain relationships where the Power/GDP breaks down a bit.
    ie Hong Kong used UK GDP to kick start it’s own wealth, so electricity tended to follow.
    Germany and Japan had massive USA investment to create their GDP after WW2.
    Similar for South Korea and Vietnam.
    Another one is Gem (Diamonds/Sapphires/Tanzanite/Emeralds etc) mining can create great GDP but use little in the way of electricity, or the Wealth created by said mining can be stolen from the country of origin and thus supress their GDP.
    Those kinds of factors have to be taken in to account when trying to compare at a lot of very different countries.

    • Roger Andrews says:

      AC: I don’t think the relationship necessarily breaks down in the case of Hong Kong. True, it’s a barren collection of rocks with no oil, gas, coal or minerals but it did have two things going for it – a (reasonably) free society and a lot of hard working and entrepreneurial people, plus its location as an outlet for China (ports again). The resource that got the electricity flowing in this case was part human, part commercial. A resource doesn’t have to be “natural” in the commonly-accepted sense of the word.

    • Willem Post says:


      As I suggested in my comment, one should start with countries that have advanced, modern economies, i.e., are similar, and analyze them as a group to see trends.

      Trends of energy per capita/$ of real GDP of THOSE countries would be of interest.

      Some countries are “more expensive” than others, for example Norway and Switzerland, and they have high GDPs/capita, and high incomes/capita. A way needs to be found to normalize those differences inside the group.

      Switzerland has a high-quality level of infrastructure, Italy has a significantly lower quality. Both are not accounted for in PPP comparisons.

        • Willem Post says:


          Thank you for the graph.

          That is quite a diverse group.

          Would it be possible to have a more homogeneous group, as I mentioned in my comment?

          Having vertical trends or even inward curving trends is best, as it signifies increased GDP (ppp basis)/capita for constant or decreasing energy consumption/capita.

          That likely means those nations are having an increasing, less energy-intensive service component in their GNP.

  10. Euan Mearns says:

    Very interesting post Roger. With electricity costing 20 €C in UK, $5 per kWh provides a multiple of 25. Its interesting how ubiquitous that $5 number is. Europe is a mess, a number of reasons for this 1) cross border flows? 2) phantom GDP – i.e. leveraged financial instruments 3) wealth of hydro in some countries 4) variation in leccy prices 5) variable climate from Arctic to Mediterranean 6) variable economic models.

    It would be interesting to see a European average to compare with USA.

    Its clear that countries can be endowed with a wealth of electricity, you gave Paragauy as an example and I found same in Mozambique. I wonder if this may be linked to the absence of a grid? So simply providing access to electricity will not make a country wealthy – automatically. A country that has wealth can clearly use that wealth to provide electricity and comfort and a virtuous circle of wealth creation.

    The interesting question is if there are countries / regions where economic development is being hindered because of a lack of electricity?

    • Thanks Euan, a lot of stuff to think about there. If you don’t mind I’ll address just your last question.

      The interesting question is if there are countries / regions where economic development is being hindered because of a lack of electricity?

      You mean, like Europe will be in a few years’ time? 😉

      Joking aside, none that immediately come to mind. As I mentioned in the post wealth of some kind almost always precedes the electricity, and when there’s wealth and no electricity the developer will simply build a power plant to provide it.

      The main obstacles to development in many developing countries are lack of infrastructure and instability. The Democratic Republic of the Congo, for example, has some of the richest copper deposits on Earth but they aren’t going to transform the economy by themselves. The Congo also has one of the world’s worst communications networks and no real progress is going to be made there until more roads and railroads are built. This article is an eye-opener:


      And civil wars, terrorism, corruption and having the government change the rules on you after you have put your widget factory into production don’t help. The problem is as much social and governmental as anything else.

      Another interesting fact I just discovered is that according to the World Bank almost all the countries with per-capita GDPs exceeding $4,000 supply electricity to at least 90% of their inhabitants, or at least claim to. I might do some more work on this.

  11. Nador says:

    Thank you for your nice charts. Please forgive me for nitpicking a rather unimportant remark.

    “Would it have worked, for instance, in Botswana, which has arguably as much coal as China and which in the 1990s had a per-capita GDP approximately five times that of China? Probably not, if only because Botswana is another landlocked country with no seaport.)”

    Sure, being landlocked is a disadvantage, nevertheless this argument is disingenuous. I understand if someone doesn’t want to mention the elephant, but if so, it might be better to choose another example.
    Or maybe I am just poor at sarcasm.

  12. Jacob says:

    Bhutan has hydro plants built by India for India’s consumption. It gets it’s electricity gratis from India, as payment for allowing India to use it’s rivers. It is an anomalous situation. It is a small country (small population), small electricity consumption, though much is available.Not a relevant case.

    • Lots of free electricity and still no significant increase in wealth. Sorry, but this strikes me as a very relevant case.

      • Euan Mearns says:

        Bhutan, Mozambique and Paraguay, all with hydro coming out of their ears, and yet incredibly poor. One possibility is geo-politics that lie behind the dam construction. And another is the lack of grid to provide access to the “free” power.

      • Jacob says:

        Electricity in Bhutan was not installed by Bhutani people, for their needs, but by the Indians, for their (Indian) needs.
        Teaches you that electricity is a necessary condition for development, but not a sufficient one.
        Electricity doesn’t create development. Development creates the need for electricity, and lack of electricity blocks development.

      • Almost every country with GDP>$4,000 supplies, or claims to supply, electricity to all or almost all of its population, although how much and how long for isn’t specified. Mozambique, Bhutan and Paraguay fit quite nicely on the trend:

        • Jacob says:

          Of course. Once people raise above abject poverty, one of the first things they require, as soon as they can afford – is electricity supply.
          But Paraguay and Bhutan are special cases – they got their electricity gratis from others, regardless of their development, need or ability to build power plants.

  13. oldfossil says:

    Roger, after spending a couple of hours creating a clean(ish) dataset from your three links I have renewed respect for your data-crunching abilities.

    Figure 3 gave me a bit of an upset. As a proud South African I wanted to know why we are using so much electricity and doing so little with it.

    I created an energy efficiency index by dividing GDP by electricity consumption. It didn’t tell me anything new that you haven’t already pointed out in your article, except that some countries, like my own, are extraordinarily wasteful of electricity. Our usage adds neither to GDP nor to PPP.

    I wouldn’t know where to start fixing this.

  14. David MacKay says:

    Great article! I love the exploration of detailed cases.

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