The Politics of Power : The Political Economy of Rent-Seeking in Electric Utilities in the Philippines
This paper takes advantage of unique intra-country variation in the Philippines power sector to examine under what conditions politicians have an incentive to "capture" an electric utility and use it for the purposes of rent-seeking. The...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110623180935 http://hdl.handle.net/10986/3472 |
| Summary: | This paper takes advantage of unique
intra-country variation in the Philippines power sector to
examine under what conditions politicians have an incentive
to "capture" an electric utility and use it for
the purposes of rent-seeking. The authors hypothesize that
the level of capture is determined by the incentives of, and
the interactions between, local and national politicians,
where the concepts of "local" and
"national" are context specific. A local
politician is defined as one whose electoral jurisdiction
lies within the utility s catchment area; by contrast, a
national politician is defined as one whose electoral
jurisdiction includes two or more utility catchment areas.
These jurisdictional differences imply different motivations
for local and national politicians: because of
"spillover" effects, local politicians have a
greater incentive to use the utility for rent-seeking than a
national politician as they capture only a portion of the
political gains from utility performance improvements as
some of the benefits of improved service will go to other
electoral jurisdictions within the utility s catchment area.
The authors posit that three variables impact the magnitude
of these incentives of local and national politicians: (i)
the local economic context, specifically the scale of rents
that can be extracted from an electricity cooperative (ii)
the degree of competitiveness of local politics; and (iii)
the political salience of an electricity cooperative s
catchment area for national politicians. The authors
illustrate this framework through case studies of specific
power utilities, and suggest some policy implications. |
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