Corruption, growth and ethnolinguistic fractionalization: a theoretical model

Roy Cerqueti, Raffaella Coppier and Gustavo Piga
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Raffaella Coppier: University of Macerata

No 57-2009, Working Papers from Macerata University, Department of Finance and Economic Sciences

Abstract:

This paper analyzes the existing relationship between ethnolinguistic fractionalization, corruption and the growth rate of a country. We provide a simple theoretical model. We show that a non-linear relationship between fractionalization and corruption exists: corruption is high in homogeneous or very fragmented countries, but low where fractionalization is intermediate. In fact, when ethnic diversity is intermediate, constituencies act as a checkand balance device to limit ethnically-based corruption. Consequently, the relationship between fractionalization and growth rate is also non-linear: growth is high in the middle range of ethnic diversity, low in homogeneous or very fragmented countries.

Date: 2009-12, Revised 2010-01
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