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WMU ECON 3880 - Nnadozie Chapter 8 Implications of Ethnic Diversity

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Implications of Ethnic Diversity: Nnadozie-Chapter 8Summary Outline-Chap.8Summary Outline-chap. 8 cont.Introduction (based on article by Paul Collier in Nnadozie book)2. What doe we know about Ethnicity and economic performance- Knowledge gaps2. What doe we know about Ethnicity and economic performance?- Knowledge gapsSlide 72. What doe we know about Ethnicity and economic performance? Cont.3.Does Ethnic Diversity Lead to Dysfunctional Politics?3.The Effect of Ethnic Diversity3. The Effect of Ethnicity in DemocraciesSlide 12The Effect of Ethnic Diversity Under DictatorshipSlide 14Ethnic Diversity, Dictatorship and Democracy- Testable hypothesisEthnicity and form of Governance: Empirically Testing the HypothesesEmpirical ResultsEthnicity and Conflict4. Does Ethnic Diversity Cause Civil War?A.The Financing of RebellionFinancing RebellionEmpirical EvidenceEmpirical Evidence cont.Policy ImplicationsSlide 25Policy Implications contTest #2Implications of Ethnic Diversity: Nnadozie-Chapter 8How does ethnic diversity Affect the Economies of Africa?Summary Outline-Chap.8•1.Introduction 2. Ethnicity & Economic Growth: knowledge gaps?•3. Ethnic Diversity & Politics…• A. Ethnic Diversity in Democracies • B. Ethnicity in Dictatorships•C. Some Testable Hypothesis •D. Empirical findingsSummary Outline-chap. 8 cont.•4.Under What conditions does Ethnic Diversity Cause Civil conflict and War?• A. Financing of Rebellion• B. Empirical Evidence•5. Policy Implications•6. Summary1. Introduction(based on article by Paul Collier in Nnadozie book)•Ethnic conflicts have increasingly become major concerns around the world…•Africa’s poverty may be in part due to its ethnic diversity?? (Easterly and Levine)•Ethnic diversity makes cooperation difficult.•Verdict: With few specific exceptions, ethnic diversity neither increases civil war nor reduces economic growth in democracies. Authoritarian rule is exception2. What doe we know about Ethnicity and economic performance- Knowledge gaps•Ethnicity is a cultural phenomenon- It is natural..•Ethnicity (like religion) as a political phenomenon is more fluid and can be potentially problematic. Example, Islamic Fundamentalism is a politicized causing serious conflicts in Muslim and other Societies.•But, kinship in traditional societies can be and efficient basis for collective action (Posner). Why?•Kin groups are efficient responses to the information and contract enforcement problems present in modern market economies, but lacking in traditional/African economies.2. What doe we know about Ethnicity and economic performance?- Knowledge gaps•Given that ethnicity can be a basis for social and political identity, what are the consequences?•Ethnic diversity or differentiation can be measured by the index of ethno-linguistic fractionalization (ELF). This index ranges from 0 (homogenous) to 1 (maximum differentiation). Observed ranges are from 0 to 0.932. What doe we know about Ethnicity and economic performance?- Knowledge gaps•Ethnic diversity can be categorized as:• 1. Ethnic dominance,- example Malaysia, South Africa, Canada, etc..• 2. Ethnic fragmentation- makes rebellion more difficult.•One rationale for rebellion is in Africa is financial. The differential ability of rebel organizations to raise finance, depends on the opportunities for predation of primary natural resources, commodity exports and contribution of diaspora communities. •Example- Liberia under Charles Taylor used diamonds to finance rebellion.2. What doe we know about Ethnicity and economic performance? Cont.•Research shows ethnic dominance doubles the risk of civil war, fragmentation may reduce risk, especially under dictatorships.•Ethnic Fragmentation makes rebellion difficult because of lack of cohesion to form armed groups.3.Does Ethnic Diversity Lead to Dysfunctional Politics?•The argument that ethnic diverse societies need a strong leader to avoid conflict is a favorite arguments for Dictators. Nigeria Military dictators used this an excuse to hold on power or refuse to yield civilian democratic rule for years.•Every time the Military took over in Nigeria, it used ethnic rebellion as an excuse to come to power.3.The Effect of Ethnic Diversity•A. The Case of Ethnic Diversity in Democracies•In case of ethnic dominance, divergence and inequality would be significant. • For example, In South Africa where blacks holds 65% of the vote (after 1994-demise of apartheid), and whites and Asians have higher incomes, ethnic politics delivers policies that maximizes the wellbeing of the 33rd percentile as opposed to 50th percentile with ethnic free politics.3. The Effect of Ethnicity in Democracies•Ethnic dominance confers durable power on a winning coalitions which then has an incentive to sacrifice growth for redistribution.•Limited ethnic fragmentation may facilitate cooperative outcomes that avoids or reduces the costs of unstable minimum winning coalitions.•The greater the extent of fragmentation, the more difficult it is to reach a cooperative solution.3. The Effect of Ethnicity in Democracies•What happens when ethnicity is suppressed?•In 1960s Uganda and Nigerian Political parties were ethnic based. After a period of dictatorship, democracy was established with constitutional changes to suppress old parties.•In Uganda politicians can only campaign as individuals- there are no political parties, because of the fear of ethnic or tribal conflicts.•In Nigeria two new parties were imposed by departing military regimes with the requirement that they be multi-ethnic.The Effect of Ethnic Diversity Under Dictatorship•In absence of checks and balances, rules and constitutions tend violate civil and property rights..•In Ethnically diverse societies, tribal loyalties may be useful in maintaining military cohesion- example: Saddam Hussein’s control of the Iraqi Army via his Tikriti clan of the Sunni Muslims. But, they are not sustainable over the long-term.•A rare benevolent dictator who succeeds in realizing gains from social planning may be sufficiently popular not to need military support. Ex. Kwan Yew of Singapore.The Effect of Ethnic Diversity Under Dictatorship•The relationship between ethnic cohesion and the power base of dictatorship has important implications..•The more ethnically fractionalized the society, the narrower the maximum military support base of the dictatorship, the less likely for


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WMU ECON 3880 - Nnadozie Chapter 8 Implications of Ethnic Diversity

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