Private Utilities and Poverty Alleviation

Private Utilities and Poverty Alleviation

Market Initiatives at the Base of the Pyramid

Edited by Patricia Márquez and Carlos Rufín

Drawing on cases from electricity distribution and other infrastructure industries, and from experiences spanning Asia, Africa and Latin America, this book examines new business models to bring basic utility services to the four billion people comprising the base of the socio-economic pyramid.

Chapter 5: Power Distribution in Argentina: Are the Strategies for the Base of the Pyramid Actually BOP Strategies?

Miguel Ángel Gardetti

Subjects: development studies, development economics, economics and finance, development economics, industrial economics, public sector economics


Miguel Ángel Gardetti The great disparity in access to electricity throughout the world, and the relationship between poverty and limited access to electricity, are well known. In 2000 the 1 billion richest people used 50 percent of the electricity generated in the world, whereas the 1 billion poorest people used only 4 percent (Leffler and Dagbjartsson 2004). Researchers, such as Clark and Wallsten (2003) and Komives et al. (2003), have also established that the poorest households have the lowest access rates to infrastructure services. The World Bank’s World Development Report 2004 considers access to basic utilities, including electricity, to be a public responsibility not exclusive to governments. According to this vision, the private sector is meant to play a major role in promoting power development (World Bank, 2004) and to join its efforts with those of the public sector (Inter-American Development Bank, n.d.; Hammond et al., 2007). The reasoning is that business-driven innovation, which contributes to economic growth, may also lead to both poverty alleviation and development. This promotion of increased access to electricity is reflected in the United Nations Millennium Development Goals (see, for example, UNDP, 2005). Multiple points of connection between electricity consumption, poverty and the environment have been demonstrated. Although low electricity consumption is not a consequence of poverty, the void left by failure to render a sustainable electricity service is very closely related to several poverty indicators. For example, according to Vivien Foster (2000) these may be 24-hour exposure rates to indoor air pollutants and the...

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