Divide and Rule or the Rule of the Divided? Evidence from Africa

We investigate jointly the importance of contemporary country-level institutional structures and local ethnicity-specific pre-colonial institutions in shaping comparative regional development in Africa. We utilize information on the spatial distribution of African ethnicities before colonization and exploit within ethnicity (across countries) and within-country (across ethnicities) regional variation in economic performance, as proxied by satellite light density at night. The fact that political boundaries across the African landscape partitioned ethnic groups in different countries, thus subjecting identical cultures to different country-level institutions, offers a regression discontinuity framework. After identifying the partitioned ethnicities we document a positive cross-sectional association between national institutions and regional economic development. However, our ethnicity fixed-effects specifications show that differences in countrywide institutional arrangements do not explain differences in regional economic performance within ethnic groups. In contrast, we document that local ethnic traits proxied by tribal pre-colonial political institutions and class stratification exert even today a significant effect on regional development. The positive within country effect of pre-colonial institutions also obtains in regions of partitioned ethnicities along the national boundaries.