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Corruption, Growth and Ethnic Fractionalization: a Theoretical Model

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This paper analyzes the existing relationship between ethnic fractionalization, corruption and the growth rate of a country. We provide a simple theoretical model. We show that a nonlinear relationship between fractionalization and corruption exists: corruption is high in homogeneous or very fragmented countries, but low where fractionalization is intermediate. In fact, when ethnic diversity is intermediate, constituencies act as a check and balance device to limit ethnically-based corruption. Consequently, the relationship between fractionalization and growth rate is also non-linear: growth is high in the middle range of ethnic diversity, low in homogeneous or very fragmented countries.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 216.

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Length: 34 pages
Date of creation: 08 Nov 2011
Date of revision: 08 Nov 2011
Handle: RePEc:rtv:ceisrp:216
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CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma

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Fax: +39062020687
Web page: http://www.ceistorvergata.it
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