Jobs, investments, and exporting
The real effects of electricity crisis in South Africa
Gideon Ndubuisi (TU Delft - Economics of Technology and Innovation)
Elvis K. Avenyo (University of Johannesburg)
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Abstract
South Africa's grid remains unstable and characterized by frequent power cuts. This paper examines the implications of South Africa's electricity crisis on jobs, capital investment, and exporting across manufacturing firms. Exploiting sectoral differences-in-exposure to the crisis, we find robust evidence that the electricity crisis has destroyed jobs, lowered capital investments, and upended export activities of manufacturing firms, with this adverse effect severe for firms in energy-intensive vulnerable sectors. Furthermore, we find that differing sources of firm heterogeneity vis-à-vis ownership structure, age, and financial status modulate the effect of electricity crisis on firm performance. Overall, these results indicate that policies aimed to help firms cope with the effect of the electricity crisis must consider the unique differences across and between manufacturing firms in South Africa.
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