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Does cultural diversity increase the rate of entrepreneurship?

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  • Russell Sobel
  • Nabamita Dutta
  • Sanjukta Roy

    ()

Abstract

In the economic development literature, cultural diversity (for example, ethnolinguistic fractionalization) has been shown to have a negative impact on economic outcomes in many underdeveloped countries. We hypothesize that the impact of diversity on economic performance depends on the quality of a country's institutions. Under bad institutions diversity leads to conflict and expropriation, while under good institutions diversity leads to economic progress. A culturally diverse society or interaction among different cultures encourages exchange of, and competition between ideas and different world views. Under good institutions, this amalgamation of ideas and views leads to greater entrepreneurial initiatives. We show that higher levels of cultural diversity increase the rate of entrepreneurship in the presence of good institutions using evidence from the United States.

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Bibliographic Info

Article provided by Springer in its journal The Review of Austrian Economics.

Volume (Year): 23 (2010)
Issue (Month): 3 (September)
Pages: 269-286

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Handle: RePEc:kap:revaec:v:23:y:2010:i:3:p:269-286

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Web page: http://www.springerlink.com/link.asp?id=100335

Related research

Keywords: Cultural diversity; Entrepreneurship; L26; 012; 017; P12;

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References

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  1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  2. Boettke, Peter & Fink, Alexander, 2011. "Institutions first," MPRA Paper 32093, University Library of Munich, Germany.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Does Cultural Diversity Increase The Rate Of Entrepreneurship?
    by Ariel Goldring in Free Market Mojo on 2010-10-09 13:00:53
  2. Does Cultural Diversity Increase The Rate Of Entrepreneurship?
    by Nicholas Gruen in Club Troppo on 2010-10-16 00:32:22
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Nina Czernich, 2011. "The emergence of broadband internet and consequences for economic and social development," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 37.
  2. Nabamita Dutta & Sanjukta Roy, 2013. "The changing face of culture: gauging the impact of a free media," European Journal of Law and Economics, Springer, vol. 36(1), pages 95-115, August.

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