Electrification to Grow Manufacturing? Evidence from Nepal

Abstract

Almost half of firms in South Asia identify electricity as a major constraint to operations. We investigate whether electrification in Nepal – via microhydro mini-grids – helped grow the manufacturing sector. Electrification led to a substantial and statistically significant increase in formal manufacturing establishments; yet the overall presence remains limited due to low baseline numbers. Labor shifts from self-employment and agriculture to employment for salary and wages. Increases in informal, non-agricultural household enterprises also contribute to labor changes. In more remote locations – farther from the historical electrical grid – the impacts of microhydro on manufacturing establishments are significantly muted.

Publication
Under Review
Zhenxuan Wang
Zhenxuan Wang
Ph.D. Candidate

My research interests lie at the intersection of environmental and energy economics, climate policy, and industrial organization.

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