The ins and outs

Prosperity for some

ECONOMISTS have long recognised that there is an association between inequality and development. Unequal incomes can impair growth if those with low incomes suffer poor health and low productivity as a result. But in a forthcoming paper* in the Journal of Political Economy, three economists look at the question in a new light. What may matter most for development, they argue, is not inequality in itself, but economic differences between different ethnic groups.

The authors pinpoint the location of 2,129 ethnic and 7,581 linguistic groups in 173 countries. Then, to estimate their wealth, they use data on night-time light intensity from satellites. (If a given area has more lights, it is likely to be richer.) That allows them to produce an “ethnic Gini index”, a measure of inequality between different ethnic groups within a country. They find that sub-Saharan Africa and East and South Asia are the most ethnically unequal regions, thanks to small but prosperous groups such as Arabs in west Africa. Western Europe, by contrast, is the most ethnically equal.

The authors...Continue reading

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