IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2112.11563.html
   My bibliography  Save this paper

Cultural Diversity and Its Impact on Governance

Author

Listed:
  • Tom'av{s} Evan
  • Vladim'ir Hol'y

Abstract

Hofstede's six cultural dimensions make it possible to measure the culture of countries but are criticized for assuming the homogeneity of each country. In this paper, we propose two measures based on Hofstede's cultural dimensions which take into account the heterogeneous structure of citizens with respect to their countries of origin. Using these improved measures, we study the influence of heterogeneous culture and cultural diversity on the quality of institutions measured by the six worldwide governance indicators. We use a linear regression model allowing for dependence in spatial and temporal dimensions as well as high correlation between the governance indicators. Our results show that the effect of cultural diversity improves some of the governance indicators while worsening others depending on the individual Hofstede cultural dimension.

Suggested Citation

  • Tom'av{s} Evan & Vladim'ir Hol'y, 2021. "Cultural Diversity and Its Impact on Governance," Papers 2112.11563, arXiv.org, revised May 2024.
    • Handle: RePEc:arx:papers:2112.11563
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2112.11563
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tito Boeri, 2010. "Immigration to the Land of Redistribution," Economica, London School of Economics and Political Science, vol. 77(308), pages 651-687, October.
    2. Lisa Hope Pelled & Gerald E. Ledford, Jr & Susan Albers Mohrman, 1999. "Demographic Dissimilarity and Workplace Inclusion," Journal of Management Studies, Wiley Blackwell, vol. 36(7), pages 1013-1031, December.
    3. Sefa Awaworyi Churchill, 2017. "Fractionalization, entrepreneurship, and the institutional environment for entrepreneurship," Small Business Economics, Springer, vol. 48(3), pages 577-597, March.
    4. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
    5. Mancur Olson, 1996. "Distinguished Lecture on Economics in Government: Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 3-24, Spring.
    6. Linghui Tang & Peter E Koveos, 2008. "A framework to update Hofstede's cultural value indices: economic dynamics and institutional stability," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(6), pages 1045-1063, September.
    7. Daniel Meierrieks & Thomas Gries, 2013. "Causality between terrorism and economic growth," Journal of Peace Research, Peace Research Institute Oslo, vol. 50(1), pages 91-104, January.
    8. Annekatrin Niebuhr, 2010. "Migration and innovation: Does cultural diversity matter for regional R&D activity?," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 563-585, August.
    9. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
    10. Taylor, John B., 2000. "Low inflation, pass-through, and the pricing power of firms," European Economic Review, Elsevier, vol. 44(7), pages 1389-1408, June.
    11. Gianmarco I.P. Ottaviano & Giovanni Peri, 2021. "The economic value of cultural diversity: evidence from US cities," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 7, pages 187-222, World Scientific Publishing Co. Pte. Ltd..
    12. Borjas, George J, 1999. "Immigration and Welfare Magnets," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 607-637, October.
    13. Nettle, Daniel, 2000. "Linguistic Fragmentation and the Wealth of Nations: The Fishman-Pool Hypothesis Reexamined," Economic Development and Cultural Change, University of Chicago Press, vol. 48(2), pages 335-348, January.
    14. Arent Greve & Janet W. Salaff, 2003. "Social Networks and Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 28(1), pages 1-22, January.
    15. Jun Wu & Shaomin Li & David D. Selover, 2012. "Foreign Direct Investment vs. Foreign Portfolio Investment," Management International Review, Springer, vol. 52(5), pages 643-670, October.
    16. Richard Baldwin & Philippe Martin, 1999. "Two Waves of Globalisation: Superficial Similarities, Fundamental Differences," Post-Print hal-03417560, HAL.
    17. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    18. Vas Taras & Piers Steel & Bradley L. Kirkman, 2016. "Does Country Equate with Culture? Beyond Geography in the Search for Cultural Boundaries," Management International Review, Springer, vol. 56(4), pages 455-487, August.
    19. J. Francois Outreville, 2018. "Culture and Life Insurance Ownership: Is It an Issue?," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 41(2), pages 168-192.
    20. Tomáš Evan & Ilya Bolotov, . "Measuring Mancur Olson: What is the Influence of Culture, Institutions and Policies on Economic Development?," Prague Economic Papers, Prague University of Economics and Business, vol. 0.
    21. Harry G Barkema & Freek Vermeulen, 1997. "What Differences in the Cultural Backgrounds of Partners Are Detrimental for International Joint Ventures?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(4), pages 845-864, December.
    22. Fahim Al‐Marhubi, 2004. "The Determinants of Governance: A Cross‐Country Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 394-406, July.
    23. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1243-1284.
    24. Robbert Maseland, 2013. "Parasitical cultures? The cultural origins of institutions and development," Journal of Economic Growth, Springer, vol. 18(2), pages 109-136, June.
    25. Taylor, Mark Zachary & Wilson, Sean, 2012. "Does culture still matter?: The effects of individualism on national innovation rates," Journal of Business Venturing, Elsevier, vol. 27(2), pages 234-247.
    26. Shankha Chakraborty & Jon C. Thompson & Etienne B. Yehoue, 2015. "Culture in Development," The World Bank Economic Review, World Bank, vol. 29(suppl_1), pages 238-246.
    27. Tomáš Evan & Ilya Bolotov, 2021. "Measuring Mancur Olson: What is the Influence of Culture, Institutions and Policies on Economic Development?," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(3), pages 290-315.
    28. Frederic L. Pryor, 2007. "Culture and Economic Systems," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(4), pages 817-855, October.
    29. Grözinger, Gerd & Langholz-Kaiser, Marlene & Richter, Doreen, 2017. "Regional Innovation and Diversity: Effects of Cultural Diversity, Milieu Affiliation and Qualification Levels on Regional Patent Outputs," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 28(2), pages 149-174.
    30. R. Quentin Grafton & Stephen Knowles & P. Dorian Owen, 2002. "Social Divergence and Productivity: Making a Connection," The Review of Economic Performance and Social Progress, in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity, volume 2, Centre for the Study of Living Standards;The Institutute for Research on Public Policy.
    31. Easterly, William, 2001. "The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-335, December.
    32. Jane N. O. Khayesi & Gerard George & John Antonakis, 2014. "Kinship in Entrepreneur Networks: Performance Effects of Resource Assembly in Africa," Entrepreneurship Theory and Practice, , vol. 38(6), pages 1323-1342, November.
    33. Vladim'ir Hol'y & Tom'av{s} Evan, 2021. "The Role of a Nation's Culture in the Country's Governance: Stochastic Frontier Analysis," Papers 2102.05411, arXiv.org, revised Apr 2021.
    34. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
    35. Fearon, James D. & Laitin, David D., 1996. "Explaining Interethnic Cooperation," American Political Science Review, Cambridge University Press, vol. 90(4), pages 715-735, December.
    36. Douglass C. North & Robert Paul Thomas, 1977. "The First Economic Revolution," Economic History Review, Economic History Society, vol. 30(2), pages 229-241, May.
    37. Leslie Williams & Stephen McGuire, 2010. "Economic creativity and innovation implementation: the entrepreneurial drivers of growth? Evidence from 63 countries," Small Business Economics, Springer, vol. 34(4), pages 391-412, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Evan, Tomáš & Holý, Vladimír, 2023. "Cultural diversity and its impact on governance," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    2. Gerring, John & Thacker, Strom C. & Lu, Yuan & Huang, Wei, 2015. "Does Diversity Impair Human Development? A Multi-Level Test of the Diversity Debit Hypothesis," World Development, Elsevier, vol. 66(C), pages 166-188.
    3. Tade O. Okediji, 2005. "The Dynamics of Ethnic Fragmentation," American Journal of Economics and Sociology, Wiley Blackwell, vol. 64(2), pages 637-662, April.
    4. Vladim'ir Hol'y & Tom'av{s} Evan, 2021. "The Role of a Nation's Culture in the Country's Governance: Stochastic Frontier Analysis," Papers 2102.05411, arXiv.org, revised Apr 2021.
    5. Victor Ginsburgh & Shlomo Weber, 2020. "The Economics of Language," Journal of Economic Literature, American Economic Association, vol. 58(2), pages 348-404, June.
    6. Usman Khalid & Mohammad Amin, 2023. "The impact of ethnic fractionalisation on labor productivity: Does firm size matter?," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(7), pages 2213-2249, October.
    7. Joseph Flavian Gomes, 2020. "The health costs of ethnic distance: evidence from sub-Saharan Africa," Journal of Economic Growth, Springer, vol. 25(2), pages 195-226, June.
    8. Rachel Franklin, 2012. "Benchmarking student diversity at public universities in the United States: accounting for state population composition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(2), pages 355-372, October.
    9. P. Dorian Owen & R. Quentin Grafton & Tom Kompas, 2004. "Productivity, Factor Accumulation and Social Networks: Theory and Evidence," Econometric Society 2004 Australasian Meetings 224, Econometric Society.
    10. Mark Gradstein & Moshe Justman, 2002. "Education, Social Cohesion, and Economic Growth," American Economic Review, American Economic Association, vol. 92(4), pages 1192-1204, September.
    11. Bodea, Cristina & Elbadawi, Ibrahim A., 2008. "Political violence and economic growth," Policy Research Working Paper Series 4692, The World Bank.
    12. Speciale, Biagio, 2012. "Does immigration affect public education expenditures? Quasi-experimental evidence," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 773-783.
    13. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    14. Ping Zhang & Xin Wei & Guirong Mao, 2024. "Cultural diversity, social integration, and migrant entrepreneurship—evidence from the China migrants dynamic survey," Small Business Economics, Springer, vol. 62(3), pages 1135-1155, March.
    15. R. Grafton & Tom Kompas & P. Owen, 2007. "Bridging the barriers: knowledge connections, productivity and capital accumulation," Journal of Productivity Analysis, Springer, vol. 28(3), pages 219-231, December.
    16. Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
    17. Zhu, Junbing & Grigoriadis, Theocharis N., 2022. "Chinese dialects, culture & economic performance," China Economic Review, Elsevier, vol. 73(C).
    18. Nazmun Ratna & R. Quentin Grafton & Hang To, 2017. "The ‘Paradox of Diversity’: Economic Evidence from US Cities 1980–2010," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 4(1), pages 20-37, January.
    19. Vladimír Holý & Tomáš Evan, 2022. "The role of a nation’s culture in the country’s governance: Stochastic frontier analysis," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(2), pages 507-520, June.
    20. Rodríguez-Pose, Andrés & Von Berlepsch, Viola, 2017. "Does population diversity matter for economic development in the very long-term? Historic migration, diversity and county wealt," CEPR Discussion Papers 12347, C.E.P.R. Discussion Papers.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2112.11563. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.