Institutional Governance and Performance in the Electricity Sector in Latin America and the Caribbean

This paper matches country-specific performance and governance characteristics of the electricity sector in order to draw conclusions about the correlation between governance features and performance outcomes in the sector. The LAC region lends itself well to such an approach, because it is characterized by significant heterogeneity across countries in the degree to which institutional options were adopted. The analysis confirms that governance matters to outcomes but that changes to governance in LAC’s electricity sector did not have the desired impact on key social performance dimensions: The overall measure of governance is not correlated with either access or affordability. In contrast, the higher the governance index, the higher the quality measures. Social payoffs are achieved only indirectly, as quality is positively correlated with better access and affordability. This finding confirms earlier results that suggest that the failure to develop regulatory capacity to explicitly address social concerns is one of the weak spots of the first wave of governance reforms in the region.