Economic Benefits of Ethnolinguistic Diversity: Implications for ...

A green light comes on in the developed polity when the right policy context composed of education, labor mobility, and research and development spending, are capable of generating innovation, creativity, and openness in political institutions and the market-place.

What are the societal conditions that determine which effect of political-cultural diversity will most shape outcomes? Implied here is the argument that although the positive and negative effects of political-cultural diversity are operative simultaneously all of the time, the positive effects are dominant in the advanced-industrial country with high per capita incomes and comparatively sophisticated governing institutions. The negative effects tend to be dominant in the developing country beset with problems of governance, weak regulatory institutions and property rights, and pronounced local rather than federal political identities. It is not that the benefits of political-cultural diversity are absent from the government and market-place of the developing country. It is that neither the institutional nor the policy context is present to enable the government of the developing polity to extract these benefits. Meanwhile, in a setting where the fundamental issues of governance have often not yet been settled in favor of state unity and coherence, the negative effects of political-cultural diversity become dominant.

Whether this hypothesis regarding the dual-faceted impact of political-cultural diversity on market-place and polity is valid, is still a subject for discussion. However, this book provides strong, though partial, support for the hypothesis. Since the emphasis here is totally on the advanced-industrial country, the extensions of argument to the developing setting, while plausible, can only be speculative. Yet the affirmative findings for the advanced-industrial market and polity receive quite clear and reliable empirical support. If replicated in other studies, the findings of this book are important and possess high policy significance. That political-cultural diversity leads to a greater propensity for innovation, openness, creativity and entrepreneurship, in the right policy context, and once a certain level of per capita income and political modernization have been achieved appears incontrovertible.