Research linking ethnic cleavages to economic underdevelopment is a hallmark of recent efforts to explain economic growth. Similarly, the rule of law as a credible commitment to property rights and contract enforcement is also identified with economic development. Rather than treating these factors as rival explanations for economic development around the world, I propose the rule of law as the causal mechanism through which ethnic fractionalization (EF) influences growth in many countries. I argue ethnic diversity negatively impacts the rule of law due to the prevalence of ethnically-based patronage networks in developing countries. Public officials, I argue, face greater incentives to undermine the rule of law in societies with pervasive ethnic cleavages than in those without. I employ pooled cross-sectional, time-series data for 55 developing countries between 1996 and 2010 to test my theoretical argument. Ultimately, my research demonstrates ethnic fractionalization's deleterious effect on the rule of law and provides a uniform framework linking demographic inputs to economic outcomes.
This document was originally published by the Addleton Academic Publishers in Economics, Management and Financial Markets. Copyright restrictions may apply.
Touchton, Michael. (2013). "The Dangers of Diversity: Ethnic Fractionalization and the Rule of Law". Economics, Management and Financial Markets, 8(1), 20-40.