On the Dynamics of Ethnic Fractionalization


  • Nauro F. Campos is professor of economics at Brunel University, London UB8 3PH, United Kingdom (nauro.campos@brunel.ac.uk). He is also a Research Fellow of IZA-Bonn and of the Davidson Institute at the University of Michigan and a Research Affiliate of the Centre for Economic Policy Research (CEPR) in London. Vitaliy S. Kuzeyev is chief economist at Ak-Bidai Ltd., Chehov 103, Kostanai, 110000, Kazakhstan (kuzeev@gi.kz).

  • The authors would like to thank Jan Fidrmuc, Julius Horvath, Gabor Kezdi, Branko Milanovic, Jeffrey Nugent, James Robinson, Colin Rowat, Marianne Stewart (the Editor), and three anonymous referees for conversations and valuable comments on previous versions. The responsibility for all remaining errors is entirely ours.


Does fractionalization change over (short periods of) time? If so, are there any substantial implications for economic performance? To answer such questions, we construct a new panel data set with measures of ethnic, linguistic, and religious fractionalization for 26 former communist countries covering the period from 1989 to 2002. Our fractionalization measures show that transition economies became more ethnically homogeneous over such a short period of time, although the same did not happen for linguistic and religious diversity. In line with the most recent literature, there seems to be no effect of (exogenous) diversity on macroeconomic performance (that is, on per capita GDP growth). However, we find that dynamic (endogenous) ethnic diversity is negatively related to growth (although this is still not the case for linguistic and religious diversity). These findings are robust to different specifications, polarization measures, and instrument sets as well as to a composite index of ethnic-linguistic-religious fractionalization.