Investment and regulation in MENA countries: The impact of Regulatory Independence

National regulatory agencies (NRAs) have been recently set up in several Mediterranean countries with the aim of increasing infrastructure investments and converging towards a harmonized regulatory framework with Europe. Our study empirically investigates the impact of the presence of independent regulatory bodies on the growth of electric generation capacity for a sample of 12 MENA countries (Algeria, Djibouti, Egypt, Iran, Iraq, Jordan, Lebanon, Libya, Morocco, Syria, Tunisia, Yemen) from 1990 to 2011. We find that the inception of a regulatory agency has a positive impact on capacity growth and, although the set-up of the NRA is influenced by the quality of the institutional environment, the impact survives when we control for socio-political factors. Our results suggest that independent regulatory agencies may act as a catalyst of a number of positive effects generated by the quality of the political institutions.