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Why are ethnically divided countries poor?

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Author Info
Bridgman, Benjamin

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Abstract

Ethnic divisions are associated with poor economic performance. This paper develops a model of ethnic conflict and finds that it is a significant source of poverty. Ethnic divisions lead the government to make ethnic transfers, which distort investment decisions, and lead to civil war because groups fight for control of the government. The simulated model generates the income gap between countries with and without ethnic divisions. Redistribution is the most important source of poverty. War costs cause less than a quarter of the reduction in income and divided countries are poorer even if they do not fight a war.

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Publisher Info
Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 30 (2008)
Issue (Month): 1 (March)
Pages: 1-18
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Handle: RePEc:eee:jmacro:v:30:y:2008:i:1:p:1-18

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Web page: http://www.elsevier.com/locate/inca/622617

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  1. Benhabib, Jess & Rustichini, Aldo, 1996. " Social Conflict and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 125-42, March.
  2. Louis Kuijs, 2000. "The Impact of Ethnic Heterogeneity on the Quantity and Quality of Public Spending," IMF Working Papers 00/49, International Monetary Fund.
  3. Chakrabarti, Subir K., 1999. "Markov Equilibria in Discounted Stochastic Games," Journal of Economic Theory, Elsevier, vol. 85(2), pages 294-327, April. [Downloadable!] (restricted)
  4. Svensson, Jakob, 2000. "Foreign aid and rent-seeking," Journal of International Economics, Elsevier, vol. 51(2), pages 437-461, August. [Downloadable!] (restricted)
  5. Grossman, Herschel I. & Mendoza, Juan, 2003. "Scarcity and appropriative competition," European Journal of Political Economy, Elsevier, vol. 19(4), pages 747-758, November. [Downloadable!] (restricted)
  6. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  7. Francesco Caselli & Wilbur John Coleman II, 2006. "On the Theory of Ethnic Conflict," NBER Working Papers 12125, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Tangerås, Thomas P. & Lagerlöf, Nils-Petter, 2002. "Ethnic Diversity and Civil War," Working Paper Series 589, Research Institute of Industrial Economics. [Downloadable!]
  9. Bernheim, B Douglas & Bagwell, Kyle, 1988. "Is Everything Neutral?," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 308-38, April. [Downloadable!] (restricted)
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  10. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August. [Downloadable!] (restricted)
  11. Easterly, William, 2001. "Can Institutions Resolve Ethnic Conflict?," Economic Development and Cultural Change, University of Chicago Press, vol. 49(4), pages 687-706, July.
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  12. Robinson, James A & Verdier, Thierry, 2002. "The Political Economy of Clientelism," CEPR Discussion Papers 3205, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. Alberto Alesina, 2002. "The Size of Countries: Does it Matter?," Harvard Institute of Economic Research Working Papers 1975, Harvard - Institute of Economic Research. [Downloadable!]
  14. Frances Stewart & Frank Humphreys & Nick Lea, 1997. "Civil conflict in developing countries over the last quarter of a century: An empirical overview of economic and social consequences," Oxford Development Studies, Taylor and Francis Journals, vol. 25(1), pages 11-41. [Downloadable!] (restricted)
  15. Josh Angrist, 2002. "How Do Sex Ratios Affect Marriage And Labor Markets? Evidence From America'S Second Generation," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 997-1038, August. [Downloadable!] (restricted)
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  16. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)
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