Models, templates and currents: the World Bank and electricity reform

Abstract

This paper argues that the standard model for reforming and restructuring the electricity industry advocated by the World Bank does not work, especially in developing and transition economies. The argument is based on the observation that there is one 'standard' model that is formulated by economists, elaborated from the reform experience in England and Wales, developed into a template for reform by the World Bank, and then transplanted to developing and transition economies. This template for reform has suffered from many failures and no successes, but is still retained. The question is how the World Bank could have got it so wrong in selling the template worldwide. The first section shows the disconnection between the institutionalized economic research and the reality. The second section discusses how the economic model was translated into policy prescriptions by the World Bank, the major force for pushing the reform. The third section examines briefly the reform experience in Orissa, India and China to show that, first, the template does not work because of original disconnection between the economic ideals and political reality, and, second, even if some ideas of the template might have merits, the template could not be copied as it stands.