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How Ethnic Diversity Affects Economic Development

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  • Erkan Gören

    (University of Oldenburg - Department of Economics)

Abstract

This paper investigates the empirical relationship between the two concepts of ethnicity and economic growth. Ethnicity is assumed to affect economic growth through a number of possible transmission channels that are generally included in cross-country growth regressions by proposing an extended econometric system of equations to describe growth and the channel variables. The system incorporates new channel variables for the potential indirect effects of ethnicity that are important in the process of economic development. The results, based on a sample of 95 countries for the period 1960-1999, suggest that the concept of ethnic fractionalization is a strong predictive measure for the direct effect of ethnicity on growth, whereas the concept of ethnic polarization has non-negligible indirect economic effects through the specified channel variables.

Suggested Citation

  • Erkan Gören, 2013. "How Ethnic Diversity Affects Economic Development," ZenTra Working Papers in Transnational Studies 14 / 2013, ZenTra - Center for Transnational Studies, revised Apr 2013.
    • Handle: RePEc:zen:wpaper:14
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    References listed on IDEAS

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    Cited by:

    1. Rogneda I. Vasilyeva & Ekaterina A. Rozhina, 2022. "Econometric Modeling of the Impact of Ethnic Diversity on Economic Diversification: Analysis of Russian Regions," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 21(4), pages 663-684.

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    More about this item

    Keywords

    ethnic diversity; fractionalization; polarization; transmission channels; economic growth;
    All these keywords.

    JEL classification:

    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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