Ethnic Diversity, Historical Economic Exchange, and Development: Evidence from Andean Peru

Miriam Artiles

American Economic Journal: Applied Economics, 2026, vol. 18, issue 2, 229-65

Abstract: Is ethnic diversity good or bad for economic development? Most studies find corrosive effects. This paper shows that historical exposure to economic exchange can mitigate these effects in the long run. I collect data from a natural experiment of Peru's colonial history: the forced resettlement of native populations in the sixteenth century. Where the resettlement concentrated ethnically diverse populations with a history of internal crop exchange, contemporary populations perform better systematically. Additional evidence suggests that prior experience with mutually beneficial crop exchange shaped more open attitudes toward out-group members. Economic complementarities helped sustain long-run, market-oriented cooperation and local trade.

JEL-codes: F54 J15 N16 N36 N56 O15 Q12 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/app.20240281

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