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Corruption, growth and ethnic fractionalization: a theoretical model

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  • Roy Cerqueti
  • Raffaella Coppier
  • Gustavo Piga

    ()

Abstract

This paper analyzes the existing relationship between ethnic fractionalization, corruption and the growth rate of a country. We provide a simple theoretical model. We show that a nonlinear relationship between fractionalization and corruption exists: corruption is high in homogeneous or very fragmented countries, but low where fractionalization is intermediate. In fact, when ethnic diversity is intermediate, constituencies act as a check and balance device to limit ethnically-based corruption. Consequently, the relationship between fractionalization and growth rate is also non-linear: growth is high in the middle range of ethnic diversity, low in homogeneous or very fragmented countries.

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File URL: http://hdl.handle.net/10.1007/s00712-011-0253-5
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Bibliographic Info

Article provided by Springer in its journal Journal of Economics.

Volume (Year): 106 (2012)
Issue (Month): 2 (June)
Pages: 153-181

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Handle: RePEc:kap:jeczfn:v:106:y:2012:i:2:p:153-181

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Web page: http://www.springerlink.com/link.asp?id=108909

Related research

Keywords: Corruption; Ethnic fractionalization; Monitoring cost; Economic growth; D73; K42; O43;

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