1. Implications of Ethnic Diversity: Nnadozie-Chapter 8 How does ethnic diversity Affect the Economies of Africa?

2. Summary Outline-Chap.8 1.Introduction 2. Ethnicity & Economic Growth: knowledge gaps? 3. Ethnic Diversity & Politics… A. Ethnic Diversity in Democracies B. Ethnicity in Dictatorships C. Some Testable Hypothesis D. Empirical findings

3. Summary Outline-chap. 8 cont. 4. Under What conditions does Ethnic Diversity Cause Civil conflict and War? A. Financing of Rebellion B. Empirical Evidence 5. Policy Implications 6. Summary

4. 1.Introduction (based on article by Paul Collier in Nnadozie book) Ethnic conflicts have increasingly become major concerns around the world… Africa’s poverty may be in part due to its ethnic diversity?? (Easterly and Levine) Ethnic diversity makes cooperation difficult. Verdict: With few specific exceptions, ethnic diversity neither increases civil war nor reduces economic growth in democracies. Authoritarian rule is exception

5. 2. What doe we know about Ethnicity and economic performance- Knowledge gaps Ethnicity is a cultural phenomenon- It is natural.. Ethnicity (like religion) as a political phenomenon is more fluid and can be potentially problematic. Example, Islamic Fundamentalism is a politicized causing serious conflicts in Muslim and other Societies. But, kinship in traditional societies can be and efficient basis for collective action (Posner). Why? Kin groups are efficient responses to the information and contract enforcement problems present in modern market economies, but lacking in traditional/African economies.

6. 2. What doe we know about Ethnicity and economic performance?- Knowledge gaps Given that ethnicity can be a basis for social and political identity, what are the consequences? Ethnic diversity or differentiation can be measured by the index of ethno-linguistic fractionalization (ELF). This index ranges from 0 (homogenous) to 1 (maximum differentiation). Observed ranges are from 0 to 0.93

7. 2. What doe we know about Ethnicity and economic performance?- Knowledge gaps Ethnic diversity can be categorized as: 1. Ethnic dominance,- example Malaysia, South Africa, Canada, etc.. 2. Ethnic fragmentation- makes rebellion more difficult. One rationale for rebellion is in Africa is financial. The differential ability of rebel organizations to raise finance, depends on the opportunities for predation of primary natural resources, commodity exports and contribution of diaspora communities. Example- Liberia under Charles Taylor used diamonds to finance rebellion.

8. 2. What doe we know about Ethnicity and economic performance? Cont. Research shows ethnic dominance doubles the risk of civil war, fragmentation may reduce risk, especially under dictatorships. Ethnic Fragmentation makes rebellion difficult because of lack of cohesion to form armed groups.

9. 3.Does Ethnic Diversity Lead to Dysfunctional Politics? The argument that ethnic diverse societies need a strong leader to avoid conflict is a favorite arguments for Dictators. Nigeria Military dictators used this an excuse to hold on power or refuse to yield civilian democratic rule for years. Every time the Military took over in Nigeria, it used ethnic rebellion as an excuse to come to power.

10. 3.The Effect of Ethnic Diversity A. The Case of Ethnic Diversity in Democracies In case of ethnic dominance, divergence and inequality would be significant. For example, In South Africa where blacks holds 65% of the vote (after 1994-demise of apartheid), and whites and Asians have higher incomes, ethnic politics delivers policies that maximizes the wellbeing of the 33 rd percentile as opposed to 50th percentile with ethnic free politics.

11. 3. The Effect of Ethnicity in Democracies Ethnic dominance confers durable power on a winning coalitions which then has an incentive to sacrifice growth for redistribution. Limited ethnic fragmentation may facilitate cooperative outcomes that avoids or reduces the costs of unstable minimum winning coalitions. The greater the extent of fragmentation, the more difficult it is to reach a cooperative solution.

12. 3. The Effect of Ethnicity in Democracies What happens when ethnicity is suppressed? In 1960s Uganda and Nigerian Political parties were ethnic based. After a period of dictatorship, democracy was established with constitutional changes to suppress old parties. In Uganda politicians can only campaign as individuals- there are no political parties, because of the fear of ethnic or tribal conflicts. In Nigeria two new parties were imposed by departing military regimes with the requirement that they be multi- ethnic.

13. The Effect of Ethnic Diversity Under Dictatorship In absence of checks and balances, rules and constitutions tend violate civil and property rights.. In Ethnically diverse societies, tribal loyalties may be useful in maintaining military cohesion- example: Saddam Hussein’s control of the Iraqi Army via his Tikriti clan of the Sunni Muslims. But, they are not sustainable over the long-term. A rare benevolent dictator who succeeds in realizing gains from social planning may be sufficiently popular not to need military support. Ex. Kwan Yew of Singapore.

14. The Effect of Ethnic Diversity Under Dictatorship The relationship between ethnic cohesion and the power base of dictatorship has important implications.. The more ethnically fractionalized the society, the narrower the maximum military support base of the dictatorship, the less likely for rebellion. On the average predatory dictatorship will have a narrower support base the more ethnically fractionalized the society.

15. Ethnic Diversity, Dictatorship and Democracy- Testable hypothesis The likely effects of ethnic diversity in different political systems is given in table 8.1 page 163 of Nnadozie text. Ethnic diversity is predicted to be damaging when ethnic dominance and dictatorship co-exist. Beyond dictatorship, ethnic fragmentation does not appear to produce any worse politics than ethnic homogeneity, and the political system may work better.

16. Ethnicity and form of Governance: Empirically Testing the Hypotheses Using data 1960-90, the effect of ethnic diversity was tested. A measure of ethnic diversity (ELF) showed ethnic diversity interacts with a measure of political rights. This interaction term is highly significant and large. Ethnic diversity may not have adverse effects in fully democratized societies, but reduces economic growth up to 3% in dictatorship.

17. Empirical Results 1. The effect of Ethnic Diversity: Easterly and Levine hypothesis that ethnic diversity may lead to bad political or policy decisions. In democracies ethnic diversity does not have a negative effect on the economy, but in dictatorship ethnicity is likely to intensify predatory behavior, and therefore harmful on society. Also, the hypothesis that effect of ethnic dominance has negative effect is not supported in democracies. i.e. Ethnic diversity does not negatively affect economic performance in free and democratic societies. Examples, USA, India, etc..

18. Ethnicity and Conflict 4. Are there conditions when Ethnic Diversity Cause Civil War? A. Financing of Rebellion B. Empirical Evidence 5. Policy Implications 6. Summary

19. 4. Does Ethnic Diversity Cause Civil War? Standard argument: Rebels rise due to some “motivation” or “preferences” Alternative hypothesis: How they are orgranized and financed matters.. Ethnicity affects the risk of conflict through various ways.

20. A.The Financing of Rebellion The ability of rebels to sustain themselves, in part, depends upon availability of financial sources… i.e.There is a finance motivation in rebellion. This source is often predation of primary commodity exports- Diamonds, Gold, Oil, etc.. Risk of rebellion will increases dependence on primary commodities, and decreases per capita income and growth..

21. Financing Rebellion Much of the rebellion in recent years is for secession motivated by commodity rents. Examples: Civil war in Sierra Leone was over diamond fields.Conflict in Zaire was over copper and diamonds in the southeast of this country.. Nigeria’s conflict( Biafra war in 1960s) was due to oil discoveries in the region. Columbia’s war was over Cocaine. The secession of Eritrea was motivated, in part, due to control of Red Sea Coast to extract rent…..

22. Empirical Evidence Collier and Hoeffler tested a statistical model to explain conflict for 161 countries over from 1960-99, with 1288 observations. 73 of which led to civil war, defined as: “where at least 1000 combat-related deaths…”. The effect of primary commodities especially under dictatorships in these conflicts and wars is powerful…

23. Empirical Evidence cont. Ethnicity enters the empirical economic model three ways: 1. Minority Ethnic dominance in autocratic states increases rebellion and civil conflict significantly. Examples: Rwanda, Iraq, etc… 2.Ethnic fragmented states may not be susceptible to rebellion. For example, Irian Jaya province of Indonesia with primary exports did not pose significant rebellion to Indonesia, due to 450 language groups in this province.. 3.Ethnicity also enters the mode through diasporas living overseas. Example include Irish Americans in IRA, Jewish Americans in Israel, Eritreans- EPLF, Overseas Somali’s contributed money to various rebels and War Lords based on Clan,that led to the collapse of the Somale state in 1991.

24. Policy Implications 1. Ethnically diverse democracies actually have less conflict than homogenous societies. Example: An example is Somalis in the Horn of Africa, with the same language, religion-Islam,. The state of Somalia collapsed in 1991 due to vicious rebellion among clans. 2. The trend for secession since WWII has been remarkable: Slovakia, Slovenia, Croatia, Bosnia, Eritrea, Chechnya, Quebec, Kosovo, Western Sahara, East Timor, Somaliland, etc.. 3. These are often rooted in economic conflict. As the number of states increases, so are global conflicts..

25. Policy Implications Primary commodities are often the basis for secession and rebellion in African economies misruled by predatory governments. Secessionist states are characterized by ethnic dominance. Example: In Yugoslavia, when Slovenia succeeded,Croatia followed which turned the Yugoslav state to a Serb majority. Secessionist states would have less ethnic diversity due “ethnic cleansing”. Note: International community should have a stronger vested interests in preservation of large multiethnic societies such as Russia, Indonesia, Nigeria, and India, and make them free and democratic.

26. Policy Implications cont One of the best way to resolve ethnic conflict is to democratize and free ethnically diverse societies. But, this is difficult and takes time. Ethnic dominance increases the risk of violent civil conflict in autocratic states, but not in democracies. The role of ethnic diasporas in US and Europe in promoting conflict in the country of origin, should be minimized for global peace and stability.

27. Test #2 Thursday, Feb. 23, over chapters 3,5,8 of the todaro & Smith text. Meet with your groups- make plans for group presentation and paper. Study Guide Questions