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Ethnic Diversity: an Economic Analysis
Abstract
Ethnically differentiated societies are often regarded as dysfunctional, with poor economic performance and a high risk (violent civil conflict. I argue that this is not well founded. I distinguish between 'dominance', in which one group constitutes a majority, and 'fractionalization', in which there are many small groups. In terms of overall economic performance, I show that both theoretically and empirically, fractionalization is normally unproblematic in democracies; although it can be damaging in dictatorships. Fractionalized societies have worse public sector performance, but this is offset by better private sector performance. Societies characterized by dominance are in principle likely to have worse economic performance, but empirically the effect is weak. In terms of the risk of civil war, I show that both theoretically and empirically fractionalization actually makes societies safer, while dominance increases the risk of conflict. A policy implication is that fractionalized societies are viable and secession should be discouraged.
... Bad institutions can be self-reinforcing, becoming a long-run hindrance to a country's political stability and development (Acemoglu and Robinson 2012). Through the usage of interaction terms and stratified samples, researchers have found that the negative impact of ethnic fractionalization on economic growth is increased by having less democratic institutions (Collier 2000(Collier , 2001Easterly 2001). ...
... Easterly and Levine (1997) argue that ethnically polarized societies cannot agree on the provision of public goods and are inclined to participate in rentseeking activities. This is consistent with the evidence that ethnic diversity can reduce growth in the presence of weak institutions or political instability (Collier 2000(Collier , 2001Easterly 2001). ...
A number of developing countries have been experiencing high rates of ethnic fragmentation, corruption and political instability. The persistent poverty in many of these countries has led to an increased interest among both researchers and policy makers as to how these factors impact a country’s economic growth. Previous research has found mixed results as to whether ethnic fragmentation, corruption and political instability affect economic growth. However, this research has been focused on the direct impact of these variables on growth. This paper innovates by empirically modelling the impact of ethnic fractionalization and corruption on economic growth, both directly and indirectly through their role in affecting political stability. The analyses also add to the literature by testing a new data set with both fixed effects and GMM estimators. Results from a large panel data set of 157 countries from 1996–2014 finds that ethnic fractionalization and corruption negatively impact economic growth indirectly by increasing political instability, which has a negative direct effect on economic growth. Once the indirect effects are accounted for, ethnic fractionalization has no significant direct effect on growth. There is weak evidence to suggest that corruption may, in some countries, actually have a positive direct effect on growth by enabling firms to circumvent bureaucratic red tape, consistent with the “greasing the wheels” hypothesis. These results emphasize the importance of establishing strong institutions which are able to accommodate diverse groups and maintain political stability. Additional results find these implications to be particularly relevant for low-income and/or sub-Saharan African countries. The results also suggest that a country having a wide diversity of languages and religions need not be a hindrance to economic growth if a robust political system is in place.
... High diversity in this way might necessitate social cooperation rather than promote conflict by encouraging the polarization of two relatively large groups within a society (Lijphart, 1999;Esteban and Ray, 2008). These scholars argue that higher diversity forces ethnic coalition building and creates cross-cutting cleavages that force institutional arrangements for elite accommodation that is better for economy and society in the long-run, such as the many consociational arrangements seen in places such as The Netherlands, Belgium, and South Africa, not to mention the highly fractionalized African countries, such as Botswana and Mauritius, which are considered relative successes (Collier 2001a, Lijphart 1999, Posner 2004). ...
... Most indicators, nevertheless, are highly correlated with each other. Another issue is that evidence for measurable social frictions because of high diversity often points in the other direction; i.e. high diversity predicts lower political frictions (Collier 2001a, de Soysa 2009, Esteban and Ray 2008. Why would economic and political failure occur without high levels of social conflict? ...
... A unit increase in the size of the minority reduces ethnic peace by roughly two basis points, which is one-third of the scale of ethnic peace. Our results are in line with the results documented by previous studies on ethnic civil war (Collier, 2001;Esteban & Ray, 2008). Ethnic exclusion from state power also predicts lower ethnic peace as suggested by 6 We also estimate our models with ongoing civil war, since the IMF might be associated with either the absence or presence of violent conflict. ...
... Our tests of conditional effects between IMF interventions and ethnic group configurations show that IMF interventions in highly fractionalized societies make them safer, contrary to those who argue the centrality of ethnic fractionalization in producing underdevelopment in the developing world (Easterly, 2001). The conditional effects on IMF interventions and polarization and the size of the ethnic group excluded from state power suggest that greater fractionalization is safer, as some have argued (Collier, 2001;de Soysa, 2011) because IMF interventions are conditionally related to higher ethnic tensions only when the size of the minority group is large and when the size of the excluded group increases. This might suggest that IMF involvement may empower large minorities to demand rights when a ruling group is in crisis and requires IMF assistance. ...
Structural adjustment programs of the IMF are often blamed for disrupting social relations by forcing austerity on vulnerable people and introducing unpopular liberalization policies. Some suggest that such interventions harm ethnic relations in developing countries because they are insensitive to the tenuous social bargains that often preserve ethnic peace. Moreover, during crises, dominant groups may seek to displace the pain of reform on others, the ethnic division of labor maybe affected differentially by reform policies, and ethnic entrepreneurs could use moments of crisis to their advantage. We test the propositions by using unique data measuring the level of ethnic tensions in a country. The results show that IMF interventions reduce conditions of ethnic enmity. These results are robust to fixed effects estimation, endogeneity, and selection effects. Moreover, IMF interventions lower ethnic tension in countries that are highly fractionalized, but they are more problematic where larger groups face each other and when larger groups are excluded from state power. These results suggest too that IMF interventions may lead to greater empowerment of excluded groups who might agitate for change during periods of economic crisis. On balance, IMF interventions, relative to continued economic woe, pacify ethnic relations in crisis-ridden countries. We find no evidence to suggest that IMF programs increase ethnic tensions, which is good news for poor countries requiring cheap loans and assistance with reforms.
... According to conflict theory, diversity may foster the in-group -out-group distinction and intensifies in-group solidarity or bonding social capital, thus increasing ethnocentrism (Putnam, 2007). However, these drawbacks of diversity largely depend on some circumstances such as income, institutions and political regime (Collier, 2001;Alesina & La Ferrara, 2005). ...
... In (Collier, 2001;Easterly, 2001;Papyrakis, Mo, 2014) it is shown that the negative impact of ethnic heterogeneity is less if there are democratic institutions that act as mediators in national conflicts. The studies by Bluedorn (Bluedorn, 2001) and later by Alesina and coauthors (Alesina et al., 2003) show that the negative impact of the diversity on economic growth is stronger in less democratic countries. ...
The paper studies change in the national and religious structure of the population and assesses the impact of cultural heterogeneity on the economic development of Russian regions. Sources of information on the national structure of the population are 2002 and 2010 censuses. The analysis of heterogeneity in the religious structure is carried out for 2012 and 2015 and sources of the data are Atlas of Religions and Nationalities of Russia and the Federal Agency for Nationality Affairs. Fractionalisation and polarisation indices are used to assess the level of cultural heterogeneity. The study of these characteristics showed that despite the intensification of migration processes in contemporary Russia, there were no major changes in the cultural structure of the population of the regions. At the same time, there is a wide variety of national and religious structures in the regions. The impact of cultural heterogeneity on economic development is estimated using regression analysis. The panel regression of gross regional product on labor, capital, controlling variables and indices of cultural heterogeneity is estimated. The results have shown: 1) the positive impact of ethnic and cultural fractionalisation on economic development; 2) the absence of a statistically significant relationship between the level of national polarisation and development; 3) the negative impact of religious polarisation on regional productivity. The results suggest that it is necessary to consider cultural heterogeneity of the society and the possibility of contradictions due to the cultural differences in the regional policy and in the decisions on the public finance
... Fractionalization may also impact the provision of public goods and increase rent seeking activities (Easterly & Levine, 1997). The negative effect of fractionalization on growth is exacerbated by weak institutions (Collier 2000(Collier , 2001Easterly, 2001). Other work has found a negative direct impact of religious fractionalization but not linguistic fractionalization on growth (Reynal-Querol, 2002). ...
... This hypotheses seems to have been proven empirically by Fershtman et al. (2006). The rest of the empirical literature focuses on ethnic, linguistic and religious fractionalization, that usually (but not always, especially in rich countries) appear to have negative effect on economic growth on cross-country analysis (Easterly and Levine 1997;Collier 2001). Alesina and La Ferrara (2005) provide a complete survey of the works on this subject. ...
We attempt to test the importance of rules and cultural sedimentation on performance by analyzing what occurs in a niche sport, table soccer and inferring by extension the weight of habit formation in a more general productivity setting. This matters since firms increasingly employ workers of different cultural backgrounds, whose interplay may have an impact on performance. Our idea is to examine the differences that exist between local and international rules in a country such as Italy and find out whether athletes’ performance is affected when they compete at international level. Adapting models adopted by the literature to forecast the success in soccer and Olympic games, we study the performances of Italians and Non-Italians athletes in the International Table Soccer World Cup. We also apply an Oaxaca-Blinder decomposition to account for explained and un-explained gaps in mean values. The results seem to confirm that globalization does not affect cultural sedimentation: local habits persist and hamper the performance of top players. Local habits matter, and habits do not die easily, even in the twenty-first century.
... These results do not support the view that fractionalization has adverse effects on sound and inclusive economic policy, policies that (Easterly 2006a). These results support others that have argued that ethnic diversity may not harm growth (Bove and Elia 2017;Collier 2001a;Lian and Oneal 1997), cooperation and social trust (Gisselquist, Leiderer and Nino-Zarazua 2016), and the ability to overcome sub-nationalism and engaging for achieving collective goods (Singh 2015), or that diversity hampers good economic management (de Soysa and Vadlamannati 2017). Why might very similarly-measured dimensions about legal security and property rights between the Fraser Institute's economic freedom index and the VDEM measures of legal security and impartiality differ, even if the substantive impacts are small either way? ...
To what extent does ethno‐linguistic diversity hinder good governance? Using a variety of data measuring political and economic corruption for 150 countries over 24 years, we find positive effects between ethno‐linguistic diversity and corruption, but the substantive effects are very slight. Higher diversity also predicts higher economic freedom and its subcomponents, measures routinely used as proxies of sound economic governance. Indicators of ethnic frictions measured as ethnic exclusion from state power and discrimination, show positive effects on good governance, results at odds with the idea that governance is harmed by fraught ethnic relations. These findings suggest that the effects of societal diversity do not uniformly explain the failure of governance. We also find diversity to matter negatively when assessing violent state repression of dissent. The results are robust to a host of alternative specifications, data, and estimating strategy, including the inclusion of region fixed effects and hybrid fixed effects.
... Some researchers claim that, in certain conditions, polarisation can also increase the probability of violent conflicts. Horowitz (1985) found an unequivocal correlation between ethnic bipolarity and risk of conflicts on a global scale: the biggest tensions frequently break out in regions where the majority faces one influential minority (Bates 1999;Collier 2001). As Dincer suggested, 'conflict is less likely in societies in which fractionalisation is minimal or maximal', that is where the ethnic compositions are relatively close to the absolutely homogeneous or absolutely fragmented ideal types (Dincer 2011, p. 291), while ethnically polarised countries 'have to endure longer civil wars than ethnically less polarised societies' (Montalvo & Reynal-Querol 2007, p. 1). ...
The focus of this article is on ethnic diversity and polarisation in Latvia after 1989. Our fundamental question is that if we interpret diversification as a dynamic process, and include polarisation as a potential direction of diversification, how much will the results differ, compared to the explanations usually proposed in the literature? The recognition that apparent homogenisation results, in particular cases, in polarisation (in this case in 35% of Latvia’s entire population) is the major contribution of our empirical analysis. Taking into account the broad scale of the potential impact of polarisation, our findings raise significant questions for the classification mechanisms that may be employed in further investigations.
... It has been noted that Collier's (2001) paper on ethnic diversity makes some attempt to account for the dynamic nature of ethnic identity. He argues that wider ethnic identities can arise during "ethnic liberation secession movements", but that the "underlying motivation may often be the capture of primary commodity rents" with ethnic identity created as a "by-product" (2001:147, 148). ...
This thesis is about the young men who joined the militant groups during the conflict in Solomon Islands (1998-2003). Interviews with ex-militants and court transcripts are employed to examine the reasons why young men decided to take up arms in the conflict. The findings are used to challenge journalistic and some scholarly accounts of the conflict that have interpreted the motives of the men who participated in it primarily in terms of greed and criminality. Such accounts are informed by an influential scholarly literature that emphasises the role of economic factors in civil wars in developing countries, commonly known as the ‘greed and grievance’ literature. The information presented in the thesis is also engaged to investigate some of the broader propositions made in the greed and grievance literature—especially the proposed relationship between ethnicity, resources and conflict—in the particular case of the conflict in Solomon Islands.
While the role of greed and criminality in the conflict cannot be disregarded, there were other motivating factors that were equally, if not more, important. Foremost of these are the ex-militants’ own conceptions of history and of the places of their respective peoples in the historical processes of colonisation, development and nation-building. The ‘objective’ history of the Solomons indicates that there is some merit to the grievance-based narratives of ex-militants: we can see how and why these narratives have emerged. A central theme for ex-militants from both sides of the conflict is the historical relationship between their respective peoples and ‘the government’. Both sides draw upon a rich tradition of resisting the state, particularly its perceived imposition upon kastom and local sovereignty over land and resources. Both sides also engage with discourses of development, highlighting perceived inequities in the distribution of primary resource rents, the geographical pattern of development, and the provision of government services.
There are other important aspects of the Solomons conflict that are obscured by the focus on greed and criminality. Foremost of these are culturalist explanations for some of the types of violence perpetrated by men in Solomon Islands and in other parts of Melanesia. These explanations problematise the Western conceptions of violence and crime that inform the greed and grievance literature. Moreover, while the so-called greed thesis may usefully enable us to see some aspects of the Solomons conflict in terms of ‘greed for the group’, the research reported here suggests that the emergence of island-wide identity groupings in Solomon Islands has been driven by the history of colonisation, uneven development and exposure to ‘other’ Solomon Islanders, as well as by the desire to capture primary resource rents. By giving a voice to some of the young men who participated in the Solomons conflict, and by providing an historical context for their stories, we can see that there is a strong need to move beyond greed and grievance if we are to understand the deeper roots of the conflict.
... For example, Easterly and Levine (1997), show that ethnic fragmentation is associated with lower economic growth, especially in Africa. Collier (1999Collier ( , 2001 adds that ethnic fractionalization is less detrimental in the presence of democratic institutions. It is, however, unclear if this observation is not a corollary of higher income, as shown in Alesina and La Ferrara (2005). ...
This chapter assesses the global evidence on major factors influencing the future of work.
... Polarization of ethnic groups is highest when two large groups face each other, where politics is likely to be zero-sum in nature. Others, relying on new institutional economics, argue that ethnic and other ties are likely to advance economic activity so that greater diversity might spur development because within-group ties reduce transaction costs where institutions are weak (Collier, 2001). On the question of civil war, Collier too argues that greater diversity might be safer than dominance by one ethnic group. ...
Many scholars argue that diverse preferences and coordination failure stemming from high ethnic diversity results in high social frictions, leading to socio-political failure. Criminological theories suggest that crime is driven by very similar processes. The specialized literature on civil war, however, reports a diversity dividend, arguing that when two large groups (polarization) make up a society, the risk of armed violence is increased. Using data on global homicide rates from the period 1995-2013 for over 140 countries, we find that ethnic heterogeneity is associated with homicide rates in an inverted U-shape relationship. Measures of ethnic polarization confirm these results directly. The results suggests that ethnic polarization and ethnic dominance rather than diversity are what matter for personal security measured as homicide rates. The conditional effect of high diversity and income inequality is associated with lower homicide rates, results that reject the view that societal heterogeneity and income inequality drive social dislocation. Several possible intervening variables, such as unemployment among males and youth, ethnic exclusion and discrimination, good governance and institutional quality, as well as several demographic and political variables, do not affect the basic results. It seems that the heavy emphasis placed on ethnic diversity for explaining social dislocation and violence, in so far as it relates to a country's homicide rate, seems to be misplaced.
... Polarization of ethnic groups is highest when two large groups face each other, where politics is likely to be zero-sum in nature. Others, relying on new institutional economics, argue that ethnic and other ties are likely to advance economic activity so that greater diversity might spur development because within-group ties reduce transaction costs where institutions are weak (Collier, 2001). On the question of civil war, Collier too argues that greater diversity might be safer than dominance by one ethnic group. ...
Many scholars argue that diverse preferences and coordination failure stemming from high ethnic diversity results in high social frictions, leading to socio-political failure. Criminological theories suggest that crime is driven by very similar processes. The specialized literature on civil war, however, reports a diversity dividend, arguing that when two large groups (polarization) make up a society, the risk of armed violence is increased. Using data on global homicide rates from the period 1995–2013 for over 140 countries, we find that ethnic heterogeneity is associated with homicide rates in an inverted U-shape relationship. Measures of ethnic polarization confirm these results directly. The results suggests that ethnic polarization and ethnic dominance rather than diversity are what matter for personal security measured as homicide rates. The conditional effect of high diversity and income inequality is associated with lower homicide rates, results that reject the view that societal heterogeneity and income inequality drive social dislocation. Several possible intervening variables, such as unemployment among males and youth, ethnic exclusion and discrimination, good governance and institutional quality, as well as several demographic and political variables, do not affect the basic results. It seems that the heavy emphasis placed on ethnic diversity for explaining social dislocation and violence, in so far as it relates to a country’s homicide rate, seems to be misplaced.
... Ethnic violence refers to violence expressly motivated by ethnic conflict and ethnic hatred, and it is usually related to political violence. There is already ample evidence on the determinants of civil conflict and instability (e.g., Bezemer & Jong-A-Pin, 2013;Collier, 2001;Elbadawi & Sambanis, 2000). Here we present theoretical reasoning about why and how economic sanctions may affect the target state's ethnic violence. ...
Economic sanctions have become a popular tool of statecraft in international politics. This paper makes an attempt to investigate the effect of economic sanctions on ethnic violence by using a sample of 46 target states over the period 1984–2008. Our results indicate that the imposition of economic sanctions has a deleterious influence on ethnic violence. Moreover, an interesting by-product finding of this paper is that we find a U-shaped relationship between income and ethnic violence, which shed new light on the income-ethnic violence nexus.
... In the social sciences, the first application of this index based on probability theory was the "ethno-linguistic fractionalization index" constructed by Taylor and Hudson (1972). Although the latter has become well known in the literature of the narrowly defined research field of ethnic diversity (e.g., see Mauro 1995;Easterly and Levine 1997;Reilly 2000Reilly /2001Collier 2001;Alesina et al. 2003;Fearon 2003;Montalvo and Reynal-Querol 2005) and a number of similar indicators have been also developed internationally (e.g., Greenberg 1956, Post-Soviet Affairs 3 109-115;Meyer and Overberg 2001;Fearon 2003;Ray 2008, 15), 1 it has largely remained a marginal and relatively lesser known research tool for most scholars. As this method has been applied very rarely and only superficially in case of Latvia, 2 a short explanation of the method seems necessary here. ...
Utilizing data from five census enumerations of Latvia (including the most recent 2011 census), this study analyzes temporal and spatial trends in ethnic diversity in the country at the national and municipal levels. The measure employed, the ethnic diversity index (EDI), makes possible a more sophisticated interpretation of the dynamics of ethnic diversity than an analysis of the changing percentage shares of Latvia's various ethnic groups over time. At the national level, a trend of declining ethnic diversity prior to Latvia's incorporation into the Soviet Union was followed by a rapid increase during the Soviet period, before the onset of gradually decreasing diversity during the post-Soviet period. These national-level trends obscure a number of trends evident at the municipal level, including salient (depending on the period) ethnic diversity gradients Riga-Latvia, cities/towns-countryside, and the east-west. Latvia remains one of the most ethnically diverse countries of Europe, and the study outlines some of the implications of the recent stagnation of regional EDIs at rather high levels for the economic and political life of the country.
... The results do not change dramatically when using the per capita GDP data sourced from the World Development Indicator 2008 (WorldBank 2008).6 For dissenting views on ethnic fractionalization and economic outcomes, seeCollier (2001) and de Soysa (2011). ...
... Diversified populations can make communication more complex and costly (Collier, 2001;Putnam, 2007). Differences in culture, incompatible social norms, and linguistic barriers can become serious impediments to communication and knowledge exchange (Parrotta et al, 2012). ...
British regions are becoming increasingly culturally diverse, with migration as the main driver. Does this diversity benefit local economies? This research examines the impact of cultural diversity on the entrepreneurial performance of UK regions. We focus on two largely overlooked factors: The measurement of diversity and the skills composition of diverse populations. First, more than demonstrating the importance of cultural diversity for entrepreneurship, we show that the type of cultural diversity measured is a decisive factor. Second, the skill composition of diverse populations is also key. Diversity amongst highly skilled workers exerts the strongest impact upon start-up intensities. The empirical investigation employs spatial regression techniques and carries out several robustness checks, including instrumental variables specifications, to corroborate our findings.
... Instead, we should judge whether the substantive effect is significant and whether the values of the measure, and changes in them, match our theoretical intuition.5 Horowitz 1985; Rothschild and Foley 1988; Sambanis 2002: 229-230;Collier 2001; Elbadawi and Sambanis 2000b; Bates 1999; Reynal-Querol 2002; Elligsen 2000. Others have suggested that it is linear for some types of violence, but non-linear for others.Sambanis 2001. ...
... The alternate view suggests that ethnicity is not the real issue: conflict may come to be ethnically patterned, but not ethnically caused. Rather, ethnicity comes to be exploited, often for reasons of political expediency, rendering ethnicity a vehicle rather than a cause of conflict (see the discussion in Collier, 2001 institutional modernization is very much the story of the construction of a modern French " nation " out of disparate, often far-flung, peasant communities who were not aware of their status as " Frenchmen. " 4 ...
Recent cross sectional growth studies have found that ethnolinguistic fractionalization is an important explanatory variable of long-run growth performance. In presenting variation over time in a number of social, political and economic dimensions, this paper adds longitudinal evidence on a range of variables that have been linked to long run economic development. Given South Africa's history of ethnic and racial politics, it constitutes a useful case study to explore the dynamics of the possible effects of ethnolinguistic fractionalization on growth. We introduce three new sets of fractionalization indicators for South Africa and one set of political indicators. This paper highlights some limitations of earlier evidence by focusing on time series evidence for South Africa. The results of this study provide important nuance to the existing body of evidence. We find that fractionalization is subject to strong change over time. In addition, we find strong evidence of webs of association between the various social, political and institutional dimensions. Thus various forms of social cleavage tend to go hand in hand. One implication is the danger of spurious inference of association – particularly where cognizance is taken of the univariate time series characteristics of the data. Further, the direction of association in the preponderance of cases runs from economic to social, political and institutional variables, rather than the other way around. However, there remain significant impacts from some, but only some fractionalization indexes on economic growth. We infer from the evidence that it is distributional conflict that impacts on economic growth – though distributional conflict may be patterned along particular social cleavages. Which social cleavage, when, how and for what period of time will depend on the historical path of specific societies. JEL: O4, O11, Z13.
... Different authors have argued that ethnic and cultural fractionalization are factors that cause disunity in a national society; a larger number of ethnic and cultural groups implies less cooperation between members of society, and has been pointed out as an obstacle for development and the provision of public goods (Alesina, Baqir and Easterly 1997;Easterly and Levine 1997) 52 . Contradicting evidence has also been found (Arcand, Guillaumont and Jeanneney 2000;Collier 2001), and this topic remains hotly debated in the discipline (Cederman and Girardin 2007;Fearon 2003). ...
... These polarized outcomes may in reality be subtler. For example, Collier (2001) contends that cultural diversity only has negative effects on economic growth in non-democratic countries, and Alesina and La Ferrara (2005) found that ethnic fragmentation has more negative effects on the economy in countries with lower levels of income. ...
While cultural diversity is increasing in cities at a global level as a result of urbanization, biodiversity is decreasing with a subsequent loss of ecosystem services. It is clear that diversity plays a pivotal role in the resilience building of ecosystems; however, it is less clear what role cultural diversity plays in the resilience building of urban systems. In this paper we provide innovative insights on how common property systems could contribute to urban resilience building. Through a review of recent findings on urban common property systems and the relevant literature, we deal with urban green commons (UGCs) and discuss their potential to manage cultural and biological diversity in cities. We describe three examples of UGCs, i.e. collectively managed parks, community gardens, and allotment areas, with a focus on their institutional characteristics, their role in promoting diverse learning streams, environmental stewardship, and social–ecological memory. We discuss how UGCs can facilitate cultural integration through civic participation in urban land-management, conditions for the emergence of UGCs, the importance of cognitive resilience building, and what role property-rights diversity plays in urban settings. We conclude by elucidating some key insights on how UGCs can promote urban resilience building.
The Russian economy is often characterized by dependence on the extraction of natural resources, which leads to high risks in the event of an unstable situation in the international market and volatility in commodity prices. Modern literature notes the significant role of economic diversification in leveling risks for the national economy, which confirms the relevance of the problem and the need to study the determinants of economic diversification. The purpose of the study is to assess the impact of the ethnic diversity of Russian regions on the diversification of the economy. At the same time, the effect of this influence is differentiated based on the results of quantile regression by separating regions with a high, medium, and low level of economic diversification. The hypothesis of the study is the assumption that the ethno-cultural heterogeneity of the regions of the Russian Federation contributes to the diversification of their economy. The regions of Russia differ to a large extent in terms of socio-economic indicators, as well as the national composition. At the same time, different ethnic groups have their own religion, language and traditions, which affects both the conduct of economic activity and the characteristics of production. For econometric modeling, panel data were used for 85 regions of Russia for the period 2000–2019. For analysis, indicators of economic diversification and ethnic diversity were calculated based on the Theil decomposition index and the ethnolinguistic fractionalization index, respectively. Taking into account the high heteroscedasticity in regional data, the method of single-stage quantile regression is used. The results of the study indicate the negative impact of the ethnic diversity index and the number of official languages on the diversification of the economy. However, the indicator of the number of major religions contributes to economic diversification. The results obtained complement the existing literature on economic diversification and ethnic diversity in the context of Russian regions, and can be used to develop public policy in the field of supporting national minorities and expanding economic diversity in Russia.
Can central bank independence (CBI) help to reduce fiscal balances? In this paper, we answer this question using novel measures of CBI based on the turnover rate of central bank governors (TOR) and the Garriga measure of legal independence for 30 African countries for the period 1990-2017. Our novel measures of CBI capture the degree of alliance between the fiscal authority and the monetary authority which can potentially lead to debt monetization and higher fiscal balances. Thus, we classify central bank governor changes into ally changes or non-ally changes; in addition to that, we decompose our full sample into CFA zone countries and non-CFA zone countries to capture the effect of currency union membership. Our results show that for CFA zone countries, central bank autonomy, when proxied by the turnover rate of central bank governors, is associated with a decrease in fiscal balances and replacing a central banker with a non-ally, is negatively and significantly associated with fiscal balances.
The effect on economic outcomes of ethnic diversity remains debatable. Some view ethnic diversity as a deterrent of development, whereas others consider it a source of innovation and productivity, which can be translated into a higher level of development. This study aims to shed further light on the issue. Applying instrumental variables estimation to district‐level data, we find that ethnic diversity has a significant positive association with nighttime light intensity, which is used as a proxy for level of economic activity. The finding is robust to alternative specifications. Our finding suggests that centuries of interethnic contacts and coexistence may have helped ethnically diverse communities to gain experimental knowledge of the diverse beliefs and social practices and transition it into better economic outcomes.
This study explores the relationship between ethnic diversity and corporate investment in Chinese listed firms. Based on data from China’s A-share market companies and the national census dataset, we find that local ethnic diversity is negatively related to corporate investment efficiency. Furthermore, we explore the channel through which ethnic diversity affects corporate investment efficiency, and our study indicates that both social trust and agency cost play mediating roles between ethnic diversity and investment efficiency. Robustness tests verify our conclusions.
Previously the role of social capital - defined as the institutions and networks of relationships between people, and the associated norms and values - in programs of poverty alleviation and development has risen to considerable prominence. Although development practitioners have long suspected that social capital does affect the efficiency and quality of most development processes, this book provides the rigorous empirical results needed to confirm that impression and translate it into effective and informed policymaking. It is based on a large volume of collected data, relying equally on quantitative and qualitative research methodologies to establish approaches for measuring social capital and its impact. The book documents the pervasive role of social capital in accelerating poverty alleviation and rural development, facilitating the provision of goods and services, and easing political transition and recovery from civil conflicts.
The relationship between ethnic heterogeneity and economic growth is complex. Empirical research working with cross-country data finds a negative, or statistically insignificant, relationship. However, analysis at city level finds a positive effect of diversity on wages and productivity. Generally, there is a trade-off between the economic benefits of diversity and the costs of heterogeneity. Using cells of fixed size we find that the relationship between diversity and growth is positive for small geographical areas. In the case of Africa, we argue that the explanation is the increase in trade at the boundaries between ethnic groups due to ethnic specialization.
Resumo: Este artigo tem dois objetivos. Primeiro: define-se e caracteriza-se clusters de restrição à liberdade religiosa (ou restrição religiosa), a nívelmundial, assente em fatores religiosos, culturais, políticos, económicos, sociais e demográficos. Segundo: desenvolve-se três modelos explicativos da restrição religiosa, assentes
nestes factores. A análise baseia-se no Pew Research Center, tanto nos dados das restrições governamentais e das hostilidades sociais, como nos seus quatro grupos (baixo,moderado, elevado emuito elevado). O principal factor explicativo da restrição religiosa é a percentagem de cristãos não ortodoxos, a mais importante nos trêsmodelos, acrescido da dimensão populacional, liberdade,
fraccionamento religioso e minoria muçulmana, cuja importância varia por modelo.
Palavras-chave: restrição religiosa, mundo, clusters, factores
Abstract: This article has two goals. First, clusters of restrictions on religious freedom (or religious restraint) are defined and characterized worldwide, based on religious, cultural, political, economic, social and demographic factors. Second, three explanatory models of religious restraint are developed, based on these factors. The analysis is based on the Pew Research Center, both in terms of government restrictions and social hostilities, and in its four groups (low, moderate, high and very high). The main explanatory factor of religious restraint is the percentage of unorthodox Christians, the most important in all
three models, plus the population size, freedom, religious fractionation and Muslim minority, whose importance varies by model.
Keywords: religious restraint, world, clusters, factors
Sri Lanka and Malaysia are basket cases of socio-economic policies that have resulted in vastly different socio-economic outcomes. Despite a vast and growing literature on ethnic tensions, the economic dimension of the problem remains largely unexamined; analyses on ethnic tensions have inevitably led to a misleading impression that both countries’ ethnic tensions are purely an ‘ethnic issue’ and that it has to be analyzed in the context of ethnic disparities of each country. This thesis addresses this misconception focusing on the economic dimension of the problem. The objective of the thesis is to analyze how economic policies can act as a stimulant to ethnic tensions or cordial ethnic relations, using Sri Lanka and Malaysia as case studies. The thesis shows that a high degree of economic openness to trade and investment ensures high growth and a disciplined government that is turn set the pre-conditions for ethnic peace.
Wir untersuchen die Ursachen von Bürgerkriegen wobei wir einen neuen Datensatz verwenden, der die Jahre 1960 bis 1999 umfasst. Dabei testen wir zwei Theorien: Einerseits können Bürgerkriege durch atypische Möglichkeiten erklärt werden, z.B. durch gute Finanzierungsmöglichkeiten der Rebellen und niedrige Kosten der Rekrutierung. Andererseits werden häufig Leidensfaktoren, z.B. politische Unterdrückung, Ungleichverteilung sowie ethnischer und religiöser Hass, als Ursachen von Bürgerkriegen zitiert. Unsere empirischen Ergebnisse zeigen, dass die Theorie der atypischen Möglichkeiten einen besseren Erklärungsansatz bietet als die Leid-Theorie. Reichtum an natürlichen Ressourcen und eine große Diaspora, definiert als der Anteil der Bevölkerung der im Ausland lebt, erhöhen das Bürgerkriegsrisiko erheblich, denn beide Faktoren erleichtern die Finanzierung einer Rebellion. Entgegen der häufig vertretenen Meinung, dass ethnische und religiöse Diversität das Bürgerkriegsrisiko erhöht, kommen wir zu dem Ergebnis, dass ein hoher Grad an Diversität dieses Risiko verringert, da es schwieriger ist, eine Rebellenorganisation aufzubauen. Unsere Ergebnisse sind robust in Hinsicht aufAusreißer, alternative Variablendefinitionen und Variationen in der Schätzmethode.
In this contribution we argue that the economic historical research in the Netherlands and Flanders can benefit much more from close cooperation with its colleagues in history departments than it presently does. We corroborate this notion by discussing some recent developments in the 'Great Divergence' debate. The extent and impact of economic inequality is one of the prime concerns of our age, and economic historians are particularly well-equipped to play a key role in this debate. We put forward some ideas to remedy the rather disappointing contribution of the 'Dutch-speaking' economic historical community which we observe at present.
In The Costs of Justice, Brian K. Grodsky provides qualitative analyses of how transitional justice processes have evolved in diverse ways in postcommunist Poland, Croatia, Serbia, and Uzbekistan, by examining the decision-making processes and goals of those actors who contributed to key transitional justice policy decisions. Grodsky draws on extensive interviews with key political figures, human rights leaders, and representatives of various international, state, and nongovernmental bodies, as well as detailed analysis of international and local news reports, to offer a systematic and qualitatively compelling account of transitional justice from the perspective of activists who, at the end of a previous regime, were suddenly transformed from downtrodden victim to empowered judge. Grodsky challenges the argument that transitional justice in post-repressive states is largely a function of the relative power of new versus old elites. He maintains that a new regime's transitional justice policy is closely linked to its capacity to provide goods and services expected by constituents, not to political power struggles. In introducing this goods variable, so common to broad political analysis but largely overlooked in the transitional justice debate, Grodsky argues that we must revise our understanding of transitional justice. It is not an exceptional issue; it is but one of many political decisions faced by leaders in a transition state. Copyright
Marginality refers to a position at the margins of social, political, economic, ecological, and biophysical systems. The paper applies this concept to the case of Ethiopia. Marginality hotspots are mapped by overlaying seven different indicators using Geographic Information System software. Results show that people in the South-West and in the North are most marginalized. Overlaying marginality hotspots with a map of agro-ecological belts shows that a large share of marginality hotspots is located in areas with low agricultural potential. Marginality is not bound to specific ethnic groups but ethnic fractionalization is significantly lower in marginality hotspots than in other areas.
Zusammenfassung: Wir analysieren die Wirkung der Dezentralisierung auf die Korruption am Bei-spiel Indonesiens. Aus theoretischer Sicht ist der Effekt unbestimmt: Zwar erhöht die größere Nähe der Betroffenen zu den Entscheidungsprozessen ihre Eingriffs-und Partizipationsmöglichkeiten, und auch der interjurisdiktionelle Wettbewerb senkt tendenziell das Korruptionsniveau, doch ist in Ent-wicklungsländern auf der lokalen Ebene der politische Prozess oft weniger transparent und die Büro-kratie ineffizienter. Wir untersuchen mithilfe einer umfangreichen Befragung die ersten Erfahrungen Indonesiens, das 2001 eine sehr weitreichende Dezentralisierung implementiert hat, und finden, dass das durchschnittliche Korruptionsniveau wenig verändert ist, aber sich die Korruption systematisch zu den Institutionen verlagert hat, deren Entscheidungskompetenzen sich vergrößert haben. Schließlich analysieren wir die Determinanten der regional sehr unterschiedlichen Korruptionsniveaus. Summary: We analyze the effect of decentralization on the corruption level for the Indonesian example. From a theoretical perspective this effect is undetermined a priori – decentralization brings the decision-making process closer to the people and thus facilitates participation and accountability and sets off an interjurisdictional competition, which both tends to lower corruption. However, in developing countries local political processes are often less transparent and administrations suffer from severe capacity constraints and inefficiencies. We analyze the impact effects of Indonesia's far-reaching decentralization in 2001 on corruption through a very encompassing survey and find that the overall level has remained unaltered, but that corruption has shifted to those institutions that have gained power. We also investigate the determinants of local corruption levels which differ very substantially across Indonesia.
Purpose
– The purpose of this paper is to examine the influence of corporate governance on intellectual capital (IC) in top service firms in Australia.
Design/methodology/approach
– Drawing on the agency theory, the paper develops hypotheses about relationships between corporate governance mechanisms (chief executive officer [CEO] duality, board size, board composition and subcommittee composition) and IC. The study uses a multiple regression analysis on data collected from corporate annual reports of 300 firm-year observations.
Findings
– The findings of the regression analysis indicate that CEO duality, board composition and remuneration committee composition are significantly associated with IC. In contrast, there is no evidence that board size and audit committee composition have an effect on IC. The study contributes to agency theory in general and the literature on IC and corporate governance more specifically.
Practical implications
– The findings of the study might be of interest to regulators, investment analysts, shareholders, company directors and managers in Australia, as well as academics, in designing corporate governance mechanisms to develop IC.
Originality/value
– Corporate governance is country-specific and, hence, its impact on managerial decisions leading to IC is different from country to country. This study provides empirical evidence on the relationship between corporate governance and IC in top service firms in Australia.
Bolivia’s recent political crisis starkly contrasts to the preceding two decades of relative democratic stability. Though a unique system of “parliamentarized” presidentialism together with lingering consensus on the national project inherited from the 1952 Revolution supported democratic stability, using qualitative and quantitative methods, this study shows that seemingly benign changes in institutional design made in the 1990s contributed to the acceleration of already existing tendencies towards divisive sectoral, regional, and ethnic politics. A key observation is that successful long-term democratization requires institutions for adequately channeling and representing social demands as well as a shared vision of a political “imagined community” that encourages both pluralism and civic attachment. The study ends with a discussion of the ongoing political crisis and speculation about when and to what degree institutional design can help promote nation building in divided societies. [This is not the final, archived version of the dissertation.]
In their survey of the literature on ethnic fractionalization and economic performance, Alesina and La Ferrara (2005) identify two main directions for future research. One is to improve the measurement of diversity and the other to treat diversity as an endogenous variable. This paper tries to address these two issues: it investigates the effects of ethnic fractionalization on economic growth across countries using unique time-varying measures. We first replicate the finding of a weak effect of exogenous diversity on growth and then we show that accounting for how diversity changes over time and treating it as an endogenous variable makes a difference. Once diversity is instrumented (with lagged diversity and latitude), it shows a significant negative impact on economic growth which is robust to different specifications, polarization measures, econometric estimators, as well as to the use of an index of ethnic-religious-linguistic fractionalization.
This paper investigates the empirical relationship between ethnic diversity, polarization, and economic growth. Ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in cross-country growth regressions. This paper provides an extensive empirical analysis shedding light on the various sources through which ethnic diversity and polarization affects economic growth indirectly. It advances and empirically establishes the hypothesis that ethnic diversity has a strong direct negative impact on economic growth, whereas ethnic polarization has non-negligible indirect economic effects through the specified channel variables.
The Republic of Fiji Islands has been under military rule since December 2006. Yet, the regime of Frank Bainimarama is not really like any other military regime in the world, nor does the 2006 coup resemble the earlier military interventions in the country. It is attempting development without freedom, but can it succeed? It is important to recognize that dictatorships can be of very different kinds. What happens with the Bainimarama regime will have a major impact upon the Pacific scene, not only for the Fiji Islands but also for the Pacific Forum and the role of China in regional integration. And the course of future events will depend much upon what strategy Fiji's strongman chooses and what kind of constitution is put in place.
Research in many societies shows that ethnic diversity correlates with a decline in cooperation at the community level. This literature neglects cases in which ethnic heterogeneity is hierarchically structured. Power and status differences between ethnic groups, or ethnic dominance, may play an important role in determining cooperative outcomes. We test this hypothesis using public goods experiments with caste groups in India in which we manipulate the caste composition of experimental groups. Conservative estimates show that ethnic dominance between high and low ranking castes has a much larger negative effect on contributions in the public goods experiment than does caste diversity. We argue that ethnic dominance interactions such as ethnic discrimination constitute a type of antisocial punishment between groups. We also find that conditional cooperation is limited to within ethnic groups, revealing ethnocentric cooperation preferences. These results confirm the importance of group structure in human cooperative patterns, and help bridge the gap between evolutionary theory and cooperation dynamics in multi-ethnic real world settings.
Because of an inflow of people into the EU but also because of the freedom of workplace choice within the EU, European regions are becoming more diverse in cultural terms. Despite the redistribution of labour and changes in regional labour supply, the ultimate question raised is whether there are additional gains or losses as a result of immigration flows. This paper therefore focuses on the impact of migrants on regional Gross Domestic Product per capita for European regions. Does the proportion of foreigners in the labour force increase or lower regional income? Does the composition of non-natives with respect to their countries of origin matter? We provide evidence that immigration and a higher degree of cultural diversity raise regional income, while controlling for endogeneity. We show that cultural diversity promotes income gains for destination countries. Whereas the presence of dominant groups reduces the costs of interaction and integration, diversity among foreign-born people increases the supply of different skills, knowledge and tasks. Thus, in general immigration has a positive net effect on regional performance and the costs of immigration in destination regions are balanced out. The regions of origin within the EU face a rise or a decline in income, depending on the labour market status of movers.
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