Cultural interaction and economic development: An overview

The rising scope and intensity of interaction between culturally polarized populations in a variety of political contexts has led to the emergence of a growing body of research on the reciprocal relationship between cultural interaction and economic development. This paper offers a brief overview of this literature. It first describes the multiple channels through which cultural divisions and economic development interact. Then, motivated by these observations, it presents a theoretical framework that highlights the scope for welfare-improving policy interventions in education, immigration policy and ethnic autonomy; surveys empirical evidence on such policies; and suggests directions for further research.