Electricity and the role of the state: New Zealand and Uruguay before state-led development (1870-1930)

Abstract

The configuration of a “modern” production structure requires there to be sufficient en-ergy supply at competitive costs. Since the last third of the nineteenth century, coal produc-tion and better natural conditions for generating electric energy at low cost explain – at least partially – the differences in favour of New Zealand with respect to Uruguay. However, in-stitutional arrangements are another relevant factor of differentiation. Our argument is based on the concept of endogeneity of natural resources, and we use it to prove the differ-ent roles of states in electricity systems: state intervention aimed at improving welfare con-ditions in Uruguay without paying enough attention to aspects related to production condi-tions; while, in New Zealand, productive development was the focus of public action. As a result, a more extensive and denser electrical network was consolidated in New Zealand which, potentially, would have created better conditions in terms of diversification and ru-ral production.