Segregation and the Quality of Government in a Cross Section of Countries
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TLDR
The authors found that more ethnically and lin guistically segregated countries, i.e., those where groups live more spatially separately, have a lower quality of government; there is no relationship between religious segregation and governance; trust is an important channel of influence; it is lower in more segregated countries.Abstract:
We provide a new compilation of data on ethnic, linguistic, and religious composition at the subnational level for a large number of countries. Using these data, we measure segregation of groups within the country. To overcome the endogeneity problem that arises because of mobility and endogenous in ternal borders, we construct an instrument for segregation. We find that more ethnically and lin guistically segregated countries, i.e., those where groups live more spatially separately, have a lower quality of government; there is no relationship between religious segregation and governance. Trust is an important channel of influence; it is lower in more segregated countries. (.JEL HI 1, H77, J15, 017, Z12, Z13) Racial and religious conflicts are often associated with poor politicoeconomic performance, especially in developing countries. Economists have recently turned their attention to ethnolinguistic fractionalization as an explanation of differences in the pace of development, starting with an influential paper by William Easterly and Ross Levine (1997). Since then, many others have shown that fractionalization is negatively correlated with a host of policy outcomes and the quality of government.1 However, many ethnically diverse countries (the United States, for instance) are quite successful. What makes different countries more or less capable of handlingread more
Figures
Table A.1: Sources of data on group composition 
Figure 6: Predicted location of religious groups across hypothetical regions in Switzerland 
Figure 7: Predictive power of the instrument conditional on all controls 
Figure 1: Segregation indices S̃ and Ŝ 
Table A.4: Sources of control variables 
Table 6.2. Openness Export plus Import as % of GDP. Average for the years 1975-2004. Source: Penn World Table 6.2.
Citations
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References
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Making Democracy Work: Civic Traditions in Modern Italy
TL;DR: Putnam et al. as discussed by the authors analyzed the efficacy of these governments in such fields as agriculture, housing, and health services, revealing patterns of associationism, trust, and cooperation that facilitate good governance and economic prosperity.
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A Pure Theory of Local Expenditures
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Why do Some Countries Produce So Much More Output Per Worker than Others
Robert E. Hall,Charles I. Jones +1 more
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Africa's Growth Tragedy: Policies and Ethnic Divisions
William Easterly,Ross Levine +1 more
TL;DR: This article showed that ethnic diversity helps explain cross-country differences in public policies and other economic indicators in Sub-Saharan Africa, and that high ethnic fragmentation explains a significant part of most of these characteristics.