There is something of a correlation between ethnic diversity and economic development in developing economies, but the real problem may be economic inequality along ethnic lines. At VoxEU , Alberto Alesina , Stelios Michalopoulos , and Elias Papaiaonnou share some of what they have learned while investigating the impact of ethnic inequality. Ethnic inequality is naturally correlated with the overall degree of spatial inequality. Since we are interested in uncovering the role of ethnic inequality beyond the overall spatial inequality Figure 2 portrays the global distribution of ethnic inequality partialling out the effect of the overall degree of spatial inequality. A few interesting patterns emerge. On the one hand, Sudan, Afghanistan, and Mongolia have much higher ethnic inequality as compared to the overall degree of spatial inequality (which is also very high). On the other hand, the US and Canada score low in ethnic inequality as compared to the overall degree of spatial inequality (which is quite high). Azerbaijan, Syria, Albania, Tunisia, Haiti, and Rwanda score quite high in ethnic inequality, while in contrast the overall degree of spatial inequality is very low. Looking at figure 2, you can see why the authors chose to focus on sub-Saharan Africa. In looking at the data for that region, they conclude that the combination of ethnic fractionalization and inequality is the real culprit: The interpretation of cross-country regressions is always challenging as countries differ across many and hard-to-account-for dimensions. In an effort to improve on the cross-country evidence, we used individual-level data from 17 sub-Saharan countries on wellbeing, education, public goods provision, and ethnic identification and explored whether ethnic inequality correlates with various development proxies across districts in the same country. Moreover, since members of the same ethnic group are present in more than one district, we can look within members of the same ethnic group. Exploiting information from more than 20,000 respondents, our analysis shows that, conditional on an array of individual characteristics, respondents living in the same country and coming from the same ethnic group report worse living conditions, lower levels of education, and inadequate access to basic public goods when they reside in districts/regions characterised with a higher degree of ethnic inequality. These results thus suggest that ethnic inequality may be an important, and so far neglected, feature of African underdevelopment. Our conjecture has been that what is harmful for development is neither inequality per se nor ethnic (or religious) fractionalisation, but the combination of the two. When wealth and poverty are clearly associated with distinct ethnic groups, the resulting ethnic inequality hampers development by generating hatred, social immobility, envy, sense of unfairness, and conflict, which create obstacles to the smooth functioning on the polity and of the economic system. Disentangling the relative importance of these channels is a fruitful avenue of future research. Read the full article here .
Filed under: VoxEU, development, Africa, developing economies, developing countries, inequality, Sub-Saharan Africa, Alberto Alesina, Alias Papaiaonnou, Stelios Michalopoulos, ethnic inequality, ethnic diversity