TAILIEUCHUNG - Ethnic diversity and economic development

A stronger post-high school education and training system would recognize that education is a life-long endeavor, with each component a natural continuation of the high-quality education that preceded it. The foundation would be a high quality early childhood, elementary, and secondary education system. Post-secondary students would have access to timely and appropriate financial aid to help finance the cost of education and training. Further, all components would share common – or aligned – goals and the classes and programs would be cumulative. . | ELSEVIER Journal of Development Economics 76 2005 293-323 JOURNAL OF Development ECONOMICS locate econbase Ethnic diversity and economic development Jose G. Montalvoa Marta Reynal-Querolb aDepartment of Economics Universitat Pompeu Fabra and IVIE C Ramon Trias Fargas 25-27 Barcelona 08005 Spain bThe World Bank and IAE Barcelona Spain Received 1 January 2002 accepted 1 January 2004 Abstract This paper analyzes the role that different indices and dimensions of ethnicity play in the process of economic development. Firstly we discuss the advantages and disadvantages of alternative data sources for the construction of indices of religious and ethnic heterogeneity. Secondly we compare the index of fractionalization and the index of polarization. We argue that an index of the family of discrete polarization measures is the adequate indicator to measure potential conflict. We find that ethnic religious polarization has a large and negative effect on economic development through the reduction of investment and the increase of government consumption and the probability of a civil conflict. 2004 Published by Elsevier . JEL classification O11 Z12 O55 Keywords Polarization indices Conflict Religious and ethnic diversity Economic growth 1. Introduction In recent years there has been increasing interest in the economic consequences of ethnic heterogeneity. In many situations ethnic polarization generates conflicts that could eventually lead to political instability and civil wars CW with long-lasting economic effects. In other cases the potential conflict represented by an ethnically polarized society Corresponding author. Tel. 34 93 5422509 fax 34 93 5421746. E-mail address . Montalvo . 0304-3878 - see front matter 2004 Published by Elsevier . doi 294 . Montalvo M. Reynal-Querol Journal of Development Economics 76 2005 293-323 can affect negatively the rate of investment and induce .

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