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Ethnic Diversity and Growth: Revisiting the Evidence

José García Montalvo¹; Marta Reynal-Querol²

¹ Universitat Pompeu Fabra, BarcelonaGSE, and IPEG · ² ICREA, Univ. Pompeu Fabra, IPEG, and BarcelonaGSE

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 the 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.

DOI

10.1162/rest_a_00901

Volume

103 (3)

Pages

521-532

Language

en

Export

BibTeX

Sources

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