A group of researchers dispel the myth that ethnic favouritism is not just an African (even Asian) thing. It is pretty much a global phenomenon.
We find robust evidence for ethnic favouritism – ethnographic regions that are the current political leader’s ethnic homeland enjoy 7%-10% more intense night-time light, corresponding to 2%-3% higher regional GDP. Furthermore, we show that ethnic favouritism extends to ethnic groups that are linguistically close to the political leader.
Most significantly, these effects are as strong outside of Africa as they are within, challenging the preconception that ethnic favouritism is mainly or even entirely a sub-Saharan African phenomenon. For example, Bolivian presidents tended to favour areas populated by European descendants and Criollos, largely at the expense of the indigenous population. After the election of Evo Morales, a member of the indigenous Ayamara ethnic group, luminosity in indigenous areas grew substantially. Notably, critics suggest Morales gave special attention to the interests and values of the Ayamara at the expense of other indigenous peoples (e.g. Albro 2010, Postero 2010).
Our results further suggest that, while democratic institutions have a weak tendency to reduce ethnic favouritism, their effect is limited. In particular, a change from autocratic regimes to weak democracies does not seem to reduce ethnic favouritism (and may even increase it).
This result could in part be explained by political leaders’ motivations for engaging in ethnic favouritism. We find that the practice intensifies around election years in which the political leader’s office is contested, suggesting that leaders may target policies towards their ethnic homelands to improve their re-election prospects, and not solely out of co-ethnic altruism. To the extent that political leaders engage in ethnic favouritism for electoral purposes, democratisation is not likely to be effective in curbing the practice.
Political leaders’ electoral concerns may also explain our finding that the benefits of ethnic favouritism are only temporary, and therefore do not contribute to sustainable development. We show that night-time light intensity in the ethnic homelands of former political leaders who have been replaced by political leaders from other ethnic groups returns to normal levels within two years of ethnic transition. We suggest this could be due to political leaders directing public funds to their ethnic homelands for consumption purposes, rather than investments in infrastructure, pursuant to a patronage logic whereby co-ethnics are considered more likely to maintain their political support when the benefits of that support depend on the leader’s continued power (Padró i Miquel 2007).
These results highlight the need to explore the ways in which political mechanisms can reduce ethnic favouritism or, even better, induce cooperation amongst ethnic groups. After all, Switzerland is a highly ethnically-segregated country, but we find no evidence of ethnic favouritism there thanks to its inclusive form of government and a presidency that rotates between different political parties and ethnic groups.
Ethnic favoritism is such a central thing in economics. Most history of business and its success and failure is based on how well this ethnic bit was managed. The western academia has made us believe that this ethnic bit is essentially a east world phenomenon. They have obviously not dug deeper into their own.