Ethnic tensions and social infrastructure

Abstract

Ethnic tensions may restrict economic growth through a number of infrastructure channels. We extend this literature by (1) using a broad measure of ethnic tensions, (2) considering a variety of measures of social infrastructure for a panel of 87 countries across 16 years and (3) explicitly addressing the endogeneity of ethnic tensions. We find ethnic tensions significantly retard the formation of social infrastructure and, by extension, impose an unnecessary cap on growth and development. As such, governments would well-serve the interests of their populaces by enacting policies, conducting politics and carrying out their daily functions in ways that serve to dampen ethnic tensions, rather than the reverse, which too often seems the case.

Notes

¹ Some have focused on pure public goods while others focus on goods and services which at most could be thought of as semi-public. Of course, when the focus is on growth, no such distinction is made. In this article we use the term social infrastructure to include all goods and services for which there is a plausible potential social spillover or which is clearly part of a society's economic infrastructure.

² This latter point is, of course, not true for those studies that focus on general economic growth.

³ Supporting results can be found in Mauro (1995), La Porta et al. (1999), and Alesina et al. (2003) each of which points to the negative effects that ethnic fragmentation can have on both the extent and quality of government institutions and activities.

⁴ The choice of fixed effects was based on a Hausman test.

⁵ Available upon request.