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Dynamic Ethnic Fractionalization and Economic Growth

  • Campos, Nauro F.
  • Saleh, Ahmad
  • Kuzeyev, Vitaliy S.

In their survey of the literature on ethnic fractionalization and economic performance, Alesina and La Ferrara (JEL 2005) identify two main directions for future research. One is to improve the measurement of diversity and the other to treat diversity as an endogenous variable. This paper tries to address these two issues. We study the effects of ethnic fractionalization on economic growth using unique time-varying measures across countries, for 26 transition economies from 1989 to 2007. Our main conclusion is that we can replicate the most recent results from the literature and show that static (exogenous) diversity is not robustly related to growth. However, when we account empirically for how ethnic diversity changes over time and treat it as an endogenous variable, our estimates show that it is negatively related to growth an effect which is robust to different estimators, specifications, and fractionalization measures.

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File URL: http://econstor.eu/bitstream/10419/39941/1/30_saleh.pdf
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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 with number 30.

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Date of creation: 2009
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Handle: RePEc:zbw:gdec09:30
Contact details of provider: Web page: http://www.ael.ethz.ch/
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