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Ethnic Diversity and Economic Performance in China: The Role of Education, FDI, and Trade

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  • Shi Young Lee
  • Eun Jung Lim
  • Qinglei Meng

Abstract

This article analyzes the effect of ethnic diversity on China’s economic performance. We claim that the conventional ethnic diversity indices may not be adequate for appropriately estimating the effect of ethnic diversity on economic performance in China, so we develop revised ethnic diversity indices. Consistent with the existing literature, we find that ethnic diversity alone worsens economic performance. However, dummies for ethnic diversity education and foreign direct investment (FDI) have a positive effect on economic performance. The marginal impact of education raises economic performance because it improves communication ability across diverse ethnic groups. At the same time, the expansion of FDI can create a proper context for ethnic groups to work together in order to improve economic performance. However, the ethnic diversity trade dummy does not significantly affect economic performance.

Suggested Citation

  • Shi Young Lee & Eun Jung Lim & Qinglei Meng, 2019. "Ethnic Diversity and Economic Performance in China: The Role of Education, FDI, and Trade," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(2), pages 337-350, January.
  • Handle: RePEc:mes:emfitr:v:55:y:2019:i:2:p:337-350
    DOI: 10.1080/1540496X.2018.1429906
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    Cited by:

    1. Meghamrita Chakraborty, 2023. "Linking Migration, Diversity and Regional Development in India," Journal of Development Policy and Practice, , vol. 8(1), pages 55-72, January.
    2. Samba Diop & Simplice A. Asongu, 2023. "Trust Institutions, Perceptions of Economic Performance and the Mitigating role of Political Diversity in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 23/013, African Governance and Development Institute..
    3. Zou, Ying & Zhong, Zhuoming & Luo, Jia, 2021. "Ethnic diversity, investment efficiency, mediating roles of trust and agency cost," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 410-420.
    4. Riazullah Shinwari & Imran Zakeria & Muhammad Usman & Muhammad Sadiq, 2024. "Revisiting the Relationship Between FDI, Natural Resources, and Economic Growth in Afghanistan: Does Political (in) Stability Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5174-5203, June.
    5. Samba Diop & Simplice A. Asongu, 2022. "Trust Institutions, Perceptions of Economic Performance and the Mitigating role of Political Diversity," Working Papers 22/056, European Xtramile Centre of African Studies (EXCAS).

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