An efficient and effective electricity network provides energy for industrial expansion while also permitting substantive improvements in living standards for the general public.

Developing countries face particularly difficult challenges in building and operating national electricity networks that require substantial up-front financing, complex operating conditions and difficult cost-recovery situations.

Fast-industrializing developing countries must cope with extremely rapid growth in power demand which can be twice as high as gross domestic product (GDP) growth.

Unsatisfactory experience with state-owned and operated electricity networks has led many countries toward a paradigm shift to private investors, including some foreign direct investment (FDI), but such reforms confront many issues.

These circumstances present an opportunity for case-study analysis of “best practices” adaptable to policy choices that continue to face developing countries and countries with economies in transition.

Electricity sector reform experiences in Chile and New Zealand provide instructive insights for selecting FDI-related policies that can help to promote sustainable development objectives.