Economic Benefits of Ethnolinguistic Diversity: Implications for ...

The existence of different cultures next to each other can lead to tensions and social conflicts. A recent study by Robert D. Putnam (2007) showed that immigration and ethnic diversity tend to reduce social solidarity and social capital. At the same time, this tension induced by diversity can become a crucial source of increased creativity and innovativeness, which can spur the economic development of countries. Scholars of this field argue that the interaction between people from different cultural backgrounds in a peaceful environment can stimulate creativity and openness to change in the society, and thus significantly benefit the economy. Therefore, it is becoming increasingly important to know how to manage diversity in order to bring out its positive potential and to avoid its possible detrimental effects. This is vital for all the countries that are ethnolinguistically diverse, either due to the existence of indigenous minorities or the more recent waves of immigration, as well as both for the advanced and the developing ones.

A prevailing opinion in the field of international political economy predicates that ethnolinguistic diversity has a negative effect on the economic performance of countries. Some of the scholars, however, argued against it and stated that under certain circumstances, the negative impact of diversity is mitigated or even reversed. According to these scholars, diversity can have a positive impact on the economy. The aim of this book is to assess whether diversity can indeed lead to higher levels of innovativeness for countries and what the circumstances are that allow for turning ethnolinguistic diversity into positive economic outcomes.

The study begins by identifying the conditions under which ethnic diversity can bring positive economic outcomes. It bases its quest of the moderating variables on the organizational science where scholars have conducted extensive research concerning the impact of diversity on the performance of firms. Then, the research from organizational science is transposed to the level of countries. Subsequently, a statistical model is designed to assess the impact of ethnolinguistic diversity on the economic outcomes, defined in terms of innovativeness. The underlying hypothesis of the study states that in the presence of the right context, ethnolinguistic diversity leads to higher levels of innovativeness, and it thus constitutes an economic benefit for countries.