Title: Africa’s Growth Tragedy: Policy and Ethnic Divisions
Author: William Easterly and Ross Levine
Scope: 3 stars
Readability: 2 stars
My personal rating: 4 stars
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Topic of Book

The authors use statistical analysis to determine the effect of ethnic diversity on economic growth.

Key Take-aways

• Ethnic diversity tends to undermine economic growth.
• Ethnic diversity tends to undermine the desire and ability of the government to make investments that promote economic growth.
• The most ethnically diverse nations in the world are in Sub-Saharan Africa

Important Quotes from Article

This paper shows that ethnic diversity helps explain cross-country differences in public policies, political stability, and other economic indicators. In the case of Sub-Saharan Africa, economic growth is associated with low schooling, political instability, underdeveloped financial systems, distorted foreign exchange markets, high government deficits, and insufficient infrastructure. Africa’s high ethnic fragmentation explains a significant part of most of these characteristics.

Political instability, rent-creating economic policies, and poor public goods may reflect a more fundamental country characteristic: ethnic divisions.

Fourteen out of the fifteen most ethnically heterogeneous societies in the world are in Africa; eight countries classified as high-income-countries by the World Bank’s Development Report are among the most ethnically homogeneous and no such rich countries are among the top-15 most ethnically diverse countries. Two of the East Asian fast growers (Japan and Hong Kong) are among the most ethnically homogeneous.