Method in the Madness? A Political-Economy Analysis of Ethnic Conflicts in Less Developed Countries

This paper is an attempt, from a political economist's point of view, to look for some clear patterns in the horrendous complexities of the ethnic and sectarian conflicts that are raging in less developed countries. We emphasize the importance of some institutional failures (like the decline of mediating institutions or of pre-existing structures of credible commitment) rather than mere cultural and historical animosities behind the collapse of inter-ethnic understandings and compromises. The rise in ethnic conflicts is not always associated with economic deterioration, sometimes quite the contrary. The effects of market expansion are also ambiguous. In our discussion of policy lessons we have tried to look for various ways, both political and economic, of constructing institutionalized incentives for conciliatory actions.