Corruption, Growth and Ethnic Fractionalization: A Theoretical Model
affiliation not provided to SSRN
Università degli Studi di Macerata - Department of Economic & Financial Institutions (DIEF)
University of Rome
November 8, 2011
CEIS Working Paper No. 216
This paper analyzes the existing relationship between ethnic fractionalization, corruption and the growth rate of a country. We provide a simple theoretical model. We show that a nonlinear relationship between fractionalization and corruption exists: corruption is high in homogeneous or very fragmented countries, but low where fractionalization is intermediate. In fact, when ethnic diversity is intermediate, constituencies act as a check and balance device to limit ethnically-based corruption. Consequently, the relationship between fractionalization and growth rate is also non-linear: growth is high in the middle range of ethnic diversity, low in homogeneous or very fragmented countries.
Number of Pages in PDF File: 34
Keywords: corruption, ethnic fractionalization, monitoring cost, economic growth
JEL Classification: D73, K42, O43working papers series
Date posted: November 8, 2011
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