Community-level ethnic diversity and community-level socio-economic development: evidence from 20 African countries

There is evidence for a strong negative association between country-level socio-economic development and country-level ethnic diversity. One explanation for this association is that diversity is associated with less social capital, hampering co-operative economic activity and good governance. However, evidence at lower levels of geographical aggregation is mixed, with some evidence that community-level development is positively associated with community-level diversity. One explanation for this difference is that repeated inter-group contact mitigates the negative consequences of diversity and promotes the adoption of capacity-enhancing innovative practices. This paper uses household survey data from 20 African countries to explore the association of community-level development with both community-level diversity and diversity at a higher level of geographical aggregation. Within this single dataset, we find strong evidence that the first association is positive and the second is negative. We also provide some evidence that the positive association is at least partly explained by an innovation channel.