Development and Ethnic Diversity Research Paper

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Societies that are developed afford their members a higher level of economic prosperity and political security. A key issue is whether ethnic diversity promotes or undermines the capacity to develop.

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An ethnic group is a collectivity whose members believe they share a common ancestry. Many such groups speak a common language and come from a common place of origin. They tend to share a common history. The members of ethnic groups therefore often regard each other as kin, even when they cannot precisely trace the links that define their relationship. When a political entity, be it a nation or city, contains many such groups, it can be described as ethnically diverse.

In the process of development, the foundations of the economy shift from agriculture to industry. To become prosperous, individuals in developing societies therefore need to acquire new skills and to shift their place of employment. While still an active subject of investigation, research thus far suggests that ethnic groups contribute to the private welfare of individuals by assisting them in this transformation. It also suggests that at the onset of development, ethnic diversity may impede the development process, while at a later stage, it may promote it.

Private Investment

To improve the welfare of their people, ethnic groups fund schools and promote literacy. They also promote migration from country to town within a given nation and from poor countries to rich, and thus enable their members to get better jobs and to earn higher incomes. Some ethnic groups specialize in particular forms of economic activity, and therefore master skills that they then impart to kin. By thus enhancing the prosperity of their members, ethnic groups contribute to the process of development.

Ethnic Diversity

There is some evidence that ethnic diversity enhances the impact of ethnic groups. People who live in culturally diverse cities in the United States pay higher rents, for example, suggesting that in such settings people can be more productive and thus both more willing and better able to dwell in such settings. One reason that diversity may enhance productivity may be competition among ethnic groups, which would lead to higher levels of investment in education and job skills; another may be that the special skills of one group enhance the productivity of the special skills of another. Because researchers, including Alberta Alesina and Eliana La Ferrara in 2005, report that the relationship between diversity and productivity is more pronounced in richer cities, the latter seems the more likely account.

Late-twentieth-century research has also focused on the impact of ethnic diversity on public policies, such as education, transportation, and health care. Some of these studies (Alesina et al. 1999) are based upon comparisons between urban centers in the United States; others (Miguel and Gugerty 2002), on small-scale communities in Africa. In both areas, scholars tend to find that the more ethnically diverse the political setting, the lower the quality of public services.

Levels Of Development

That ethnic diversity inhibits the formation of public services may help to explain a major finding in this field: the negative relationship between ethnic diversity and economic growth in poor societies. First reported in William Easterly and Ross Levine’s 1997 article for the Quarterly Journal of Economics, the finding has been replicated using cross-national data and data for urban areas in the United States. Since that time, however, researchers have noted that the relationship between ethnic diversity and growth is not straightforward. While negative in poor societies, it turns positive at higher levels of income, according to research by Alesina and La Ferrara (2005).

In the underdeveloped nations, economic growth may require better roads, schools, and other services, and ethnic diversity appears to make it difficult for people to cooperate in their provision. In richer economies, economic growth may be driven by the private sector, and ethnic diversity appears to enhance economic productivity.


Many argue that ethnic diversity threatens development by rendering violence more likely. This claim derives from studies of political conflicts, which often focus on the ethnic tensions that underlie them.

The claim can be challenged on several grounds. As stressed by James Fearon and David Latin (1996), the evidence is improperly drawn; societies at peace are often ethnically diverse as well. Moreover, ethnic diversity is related to poverty and poverty to political conflict; it is therefore difficult to isolate the independent contribution of ethnic diversity to political disorder. Students of Africa—the most ethnically diverse region in the world—report that it is not the diversity that promotes violence but rather concentration: when one group is big enough to capture the state, then others fear the possibility of political exclusion and political tensions therefore rise.

Ethnic groups thus energize the transformation of economies from agrarian to industrial and of societies from rural to urban; by so doing, they promote development. At low levels of income, ethnic diversity may impede development; at higher levels, it may promote it. The political dangers of ethnic diversity appear overdrawn.


  1. Alesina, Alberto, Reza Baqir, and William Easterley. 1999. Public Goods and Ethnic Divisions. Quarterly Journal of Economics 114: 1243–1284.
  2. Alesina, Alberto, and Eliana La Ferrara. 2005. Ethnic Diversity and Economic Performance. Journal of Economic Literature 43: 762–800.
  3. Bates, Robert H., and Irene Yackolev. 2002. Ethnicity in Africa. In The Role of Social Capital in Development, ed. Christiaan Grootaert and Tiery van Bastelaer. New York: Cambridge University Press.
  4. Collier, Paul. 1999. The Political Economy of Ethnicity. In Proceedings of the Annual Bank Conference on Development Economics, ed. Boris Pleskovic and Joseph Stigler. Washington, DC: The World Bank.
  5. Easterly, William, and Ross Levine. 1997. Africa’s Growth Tragedy: Policies and Ethnic Divisions. Quarterly Journal of Economics 112: 1203–1250.
  6. Fearon, James D., and David D. Latin. 1996. Explaining Interethnic Cooperation. American Political Science Review 90: 715–735.
  7. Miguel, Edward, and Mary K. Gugerty. 2005. Ethnic Diversity, Social Sanctions, and Public Goods in Kenya. Journal of Public Economics 89: 2325–2368.
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