I-Dollar EYI One! -Ethnolinguistic Fractionalisation, Communication Networks and Economic Participation-Lessons from Cape Town, South Africa

The relationship between ethnolinguistic fractionalisation and development has long been of interest to economists and linguists. While econometric analyses have shown relatively stable interactions between high levels of fractionalisation and low indices of development, the mechanisms underlying this relationship are still unclear. This paper explores the importance of fragmented versus unified communication networks for socio-economic development, using data from Cape Town, South Africa. Like other cities in low- and middle-income countries, Cape Town shows growing linguistic diversity due to high levels of rural-urban migration. Two aspects of the city's economy will be discussed on the basis of specialised survey data and anthropological fieldwork: (a) the labour market, and (b) informal entrepreneurial activities. The analysis shows the importance of language as an explanatory variable in the study of economic life, and allows us to advance our understanding of human and social capital formation in ethnolinguistically fragmented societies. In the conclusion the authors discuss the policy implications of the study.