How To Make A Tragedy: On The Alleged Effect Of Ethnicity On Growth

This paper questions the line of reasoning followed by several authors, notably Easterly and Levine (1997), according to which ethno-linguistic fragmentation, mainly because it leads to poor policies, is an handicap to growth. A first set of criticisms concerns the model itself: (i) polarization may be more relevant than fragmentation, (ii) the coefficients associated with macro-policy variables are not reduced when ethnic variables are introduced, even with an homogeneous sample; (iii) several other tests of the effect of ethnicity on the quality of policy are far from being conclusive. A second set of remarks concerns the relevance of these studies to Africa: (i) the Africa dummy is generally insensitive to the inclusion of ethnic fragmentation; (ii) the African sub-sample is quite limited (nine out of forty observations, on average), and the relationship is unstable (according to Chow tests). Current empirical work is unable to convincingly identify the channels through which ethnic fragmentation affects growth. Moreover, there appears to be no robust evidence indicating that the effect of ethnic fragmentation on growth operates through its impact on policy choices.