Endogenizing fractionalization

Peter T. Leeson ()

Journal of Institutional Economics, 2005, vol. 1, issue 01, pages 75-98

Abstract: In this paper I identify fractionalization as a consequence rather than solely a cause of poor institutions. I investigate how heterogeneous agents in precolonial Africa relied on social distance-reducing signals to make trade with one another possible. I then show how colonial institutions created noise in these signals, inhibiting widespread cooperation. By stifling trade between diverse agents, colonial institutions contributed to Africa s poor economic growth.

Date: 2005
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