Analyzing business environment- Power outages as an obstacle for firms

Abstract

An efficient firm infrastructure is considered as one of the key factors of the firm performance considering its impact on time and cost savings. The positive impact of the quality of infrastructure on firm performance is very cognitive, but the lack of adequate infrastructure remains an important obstacle especially on transition economies. Thus, primary objective of this paper is to provide information regarding the power outages as an obstacle to firm’s performance. This paper focuses on the cross-country comparison with the intention to show the progress done by governments in improving this obstacle to the private sector using survey data provided by World Bank in partnership with EBRD. This is the Business Environment and Enterprise Performance Survey (BEEPS) database which offers a wide range of topics of business environment. The results show that Kosovo leads regarding the average hours without electricity, number of power outages in a typical month and the percentage of sales loses due to electricity insufficiency. The panel data techniques, respectively the fixed effect model, show a negative and significant impact of the average number of power outages on the sales growth.