Ethnic Diversity and Growth: Revisiting the Evidence

51 Pages Posted: 30 Oct 2017 Last revised: 16 Aug 2020

See all articles by Jose G. Montalvo

Jose G. Montalvo

Universitat Pompeu Fabra

Marta Reynal-Querol

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; World Bank - Development Research Group (DECRG)

Date Written: October 2017

Abstract

The relationship between ethnic heterogeneity and economic growth is complex. Empirical research working with cross-country data finds a negative, or statistically insignificant, relationship. However, analysis at city level finds a positive effect of diversity on wages and productivity. Generally, there is a trade-off between the economic benefits of diversity and the costs of heterogeneity. Using cells of fixed size we find that the relationship between diversity and growth is positive for small geographical areas. In the case of Africa, we argue that the explanation is the increase in trade at the boundaries between ethnic groups due to ethnic specialization.

Keywords: economic growth, Ethnicity, Scale

Suggested Citation

Montalvo, Jose G. and Reynal-Querol, Marta and Reynal-Querol, Marta, Ethnic Diversity and Growth: Revisiting the Evidence (October 2017). Available at SSRN: https://ssrn.com/abstract=3061833

Jose G. Montalvo (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain

Marta Reynal-Querol

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-458-7891 (Phone)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
93 5422590 (Phone)

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