Imperative of Institutions for Effective Relationship Between Economic Performance and Ethnic Diversity

Zhang Peng, Ghulam Rasool Madni (), Muhammad Awais Anwar and Iftikhar Yasin
Additional contact information
Zhang Peng: Anhui University of Science & Technology
Ghulam Rasool Madni: University of Education
Muhammad Awais Anwar: University of Education
Iftikhar Yasin: The University of Lahore

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 115, 2794-2807

Abstract: Abstract The impact of ethnic diversity on economic performance is a divisive topic in literature that needs to be explored further. There are two opposing views about the relationship between economic performance and ethnic fractionalization; it is perceived that highly segregated communities have social conflicts and tensions which affect economic activities in a negative way. On the other hand, ethnically diverse communities are assumed to have more capacity for problems-solving because people have a variety of diverse thinking approaches. The role of institutional quality is hardly discussed in earlier studies while exploring the relation between diversity and economic performance. It is argued in this study that the relation between economic performance and diversity is determined by prevailing quality of institutions in a country. The instrumental variable threshold regression approach is used for an unbalanced panel data of 89 economies covering the time period of 1990–2020 to investigate the relation among economic performance, ethnic diversity, and institutional quality. The empirical outcomes of the paper highlight that the presence of institutional quality up to a certain threshold level is mandatory to increase economic performance through ethnic diversity, while ethnic diversity deteriorates the economic performance, if the quality of institutions is below the threshold level in an economy. The policy makers of ethnically fractionalized societies should focus to improve the quality of institutions for better economic performance.

Keywords: Ethnic diversity; Economic performance; Institutional quality (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s13132-023-01195-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jknowl:v:15:y:2024:i:1:d:10.1007_s13132-023-01195-y

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13132

DOI: 10.1007/s13132-023-01195-y

Access Statistics for this article

Journal of the Knowledge Economy is currently edited by Elias G. Carayannis

More articles in Journal of the Knowledge Economy from Springer, Portland International Center for Management of Engineering and Technology (PICMET)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().