Ethnic Inclusiveness of the Central State Government and Economic Growth in Sub-Saharan Africa

Abstract

We estimate the effect of the share of ethnic groups included in the central government on economic growth, distinguishing between democracies and autocracies in a panel of 41 sub-Saharan African countries over the period 1950-2000. We exploit evidence from the Ethnic Power Relations database that categorizes the politically relevant ethnic groups in terms of access to state power. We are taking advantage of the within-country variation and using Fixed-Effects, Difference-GMM and System-GMM estimations. Our dynamic panel data and error-correction growth models display a robust positive effect of the proportion of included groups in democracies. This effect is offset in autocracies and the difference is often significantly negative. This finding withstands the introduction of various controls and specification checks. We provide a theoretical rationalization of this observed phenomenon in the form of a mechanism involving the opposition of forces linked to efficiency gains, coordination failures and inclusiveness.