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Ethnic Diversity, Historical Economic Exchange, and Development: Evidence from Andean Peru

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  • Miriam Artiles

Abstract

Is ethnic diversity good or bad for economic development? Most studies find corrosive effects. This paper shows that historical exposure to economic exchange can mitigate these effects in the long run. I collect data from a natural experiment of Peru's colonial history: the forced resettlement of native populations in the sixteenth century. Where the resettlement concentrated ethnically diverse populations with a history of internal crop exchange, contemporary populations perform better systematically. Additional evidence suggests that prior experience with mutually beneficial crop exchange shaped more open attitudes toward out-group members. Economic complementarities helped sustain long-run, market-oriented cooperation and local trade.

Suggested Citation

  • Miriam Artiles, 2026. "Ethnic Diversity, Historical Economic Exchange, and Development: Evidence from Andean Peru," American Economic Journal: Applied Economics, American Economic Association, vol. 18(2), pages 229-265, April.
    • Handle: RePEc:aea:aejapp:v:18:y:2026:i:2:p:229-65
    DOI: 10.1257/app.20240281
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    More about this item

    JEL classification:

    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • N36 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Latin America; Caribbean
    • N56 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Latin America; Caribbean
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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