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Social Fragmentation and Public Goods Revisiting the Olson's Effect in Uttar Pradesh and Bihar

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A vast recent literature has stressed social fragmentation's negative impact on the provision of public goods. This is a key issue, given that public goods availability has been reckoned as crucial to economic development, while developing countries' societies often exhibit high degrees of fragmentation. Although it has been well established both empirically and theoretically that fragmentation is detrimental to collective action, two caveats ought to be considered. First, a high level of social fragmentation is often associated with greater inequality, which, as Olson pointed out, may be beneficial to collective action. In Olson's argument, should most of the public goods benefits accrue to a small number of group members, they are encouraged to invest in group activities, given that their stakes in the collective action are quite high. Second, should access to publicly provided goods be restricted to the elite, a positive relationship may be found between fragmentation and ethnically based patronage. Given that both patronage and inequality are common in developing countries, it is surprising that fragmentation has never been found to have a positive effect on the provision of public goods. This article aims at showing that not only does this positive relationship exist, but it is linked to the presence of wealthy individuals who are in a position to deny access to public goods to other groups members.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 09058.

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Length: 37 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:mse:cesdoc:09058

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Keywords: Political economy; public goods; collective action; inequality; Olson; Caste; India.;

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