Diversity and Growth

36 Pages Posted: 11 Jun 2018

See all articles by Mark Gradstein

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); World Bank - Development Research Group (DECRG)

Moshe Justman

Ben-Gurion University of the Negev - Department of Economics; University of Melbourne - Melbourne Institute: Applied Economic & Social Research

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Abstract

The diversity of social interaction within economic communities affects productivity and growth, and is itself shaped by economic conditions. These reciprocal effects raise the possibility of multiple equilibria, of setting a socially polarized economy stagnating in poverty on a new path of social integration and economic growth through external intervention or an internal political initiative. This paper describes a simple analytical model that captures these reciprocal effects, and sheds light on the role of government capacity, community leadership, federation and external credit or aid, in achieving economic growth through social integration.

Keywords: cultural diversity, economic growth, social interaction

JEL Classification: O11, Z10, Z18

Suggested Citation

Gradstein, Mark and Justman, Moshe, Diversity and Growth. IZA Discussion Paper No. 11553, Available at SSRN: https://ssrn.com/abstract=3193307 or http://dx.doi.org/10.2139/ssrn.3193307

Mark Gradstein (Contact Author)

Ben-Gurion University of the Negev - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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World Bank - Development Research Group (DECRG)

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Moshe Justman

Ben-Gurion University of the Negev - Department of Economics ( email )

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Israel
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+972 864 72941 (Fax)

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

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Australia

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