The political economy of power sector reform

In their book "The political economy of power sector reform", Dr. D.Victor and Dr. T.Heller have summarized very well the experience of five developing countries (Brazil, China, India, Mexico and South Africa) with power sector reform. The lessons learned are applicable not only to developing countries, but developed countries, too.

The textbook model was not applied anywhere. Hybrid models emerged crafted around the specific peculiarities of each country. These models are not viewed by the authors as temporary (transient) leading to the textbook model, but rather as stable equilibrium outcomes".

"Dual firms" emerged and continue to play a key role.

Factors outside the power sector are critical, too; key among them are: the legal system ("rule of law") and weak institutions.

Outside the scope of this book is the effectiveness of power sector reform in developed countries. While there are isolated success stories (Wales, UK and Chile), in most cases reform has faced many obstacles and has not resulted in meaningful competition leading to lower prices for consumers.