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Dynamic Ethnic Fractionalization and Economic Growth in the Transition Economies from 1989 to 2007

Author

Listed:
  • Campos, Nauro F.

    (University College London)

  • Saleh, Ahmad

    (Brunel University)

  • Kuzeyev, Vitaliy S.

    (affiliation not available)

Abstract

In their survey of the literature on ethnic fractionalization and economic performance, Alesina and La Ferrara (JEL 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.

Suggested Citation

  • Campos, Nauro F. & Saleh, Ahmad & Kuzeyev, Vitaliy S., 2009. "Dynamic Ethnic Fractionalization and Economic Growth in the Transition Economies from 1989 to 2007," IZA Discussion Papers 4597, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4597
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    References listed on IDEAS

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    1. José G. Montalvo & Marta Reynal-Querol, 2005. "Ethnic Polarization, Potential Conflict, and Civil Wars," American Economic Review, American Economic Association, vol. 95(3), pages 796-816, June.
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    3. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
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    Cited by:

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    More about this item

    Keywords

    polarization; fractionalization; ethnic diversity; growth;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • H1 - Public Economics - - Structure and Scope of Government

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