The Economist on Diversity and Development

I was looking for information on how cultures affect growth and stumbled on this 12.5 year old article in The Economist:

Diversity and development might seem to sit oddly together. But they are intimately linked, and the report seeks to show that they are not related in the way many people assume. The UNDP’s press release says unambiguously that “there is no evidence that cultural diversity slows development”, and dismisses the idea that there has to be a trade-off between respecting diversity and sustaining peace. Some of the world’s richest and most peaceful countries are historically multi-ethnic, such as Switzerland, Canada and Belgium. And most of the world’s richest countries are now the destination of immigrants from around the world, making America, Britain and other wealthy nations hugely diverse.

I imagine if you make a movie whose cast is perfectly representative of the population of diverse Switzerland or Belgium of a decade ago when this article was written, and the movie was a masterpiece, it would run afoul of #oscarssowhite.

But there is some evidence that diversity has costs. In a recent book, “The Size of Nations” (see article), two economists show that managing ethnic diversity is expensive, as governments must deal with the demands of groups competing for scarce resources. In the United States, a study has shown that people are willing to pay more for services like education if they can live with people more like them in ethnicity and class. In other words, people place a value on being with others like them. Multi-ethnic nations have been breaking apart recently (the Soviet Union, Yugoslavia); few countries have merged during the same period, and those that have were ethnic mates (East and West Germany, North and South Yemen).

A quick look at the Human Development Index (HDI), released each year in the report, seems to support the idea that diversity has its costs. In the bottom 35 countries ranked as having “low human development”, all but three are in vastly diverse Africa, where borders drawn by colonialists showed no respect for tribal, linguistic or religious identities. Meanwhile, while single-ethnicity states are rare (just 30 countries in the world do not have a religious or ethnic minority that constitutes at least 10% of the population), they are strongly represented at the top of the HDI: places like Norway, Sweden, the Netherlands, Japan, Ireland and Austria.

The article continues:

The report recommends several political strategies for coupling diversity and development. One is “asymmetrical federalism”—the type of constitutional arrangement seen in Spain and Canada, where regions dominated by a cohesive minority (like Québec or the Basque country) get special local-government powers that others do not. This both recognises the region’s distinct identity and binds it to the central state. After all, the authors point out, most people in Spain’s minority regions see themselves as both Spanish and Basque (or Catalan or Galician)—not just one or the other. Giving those overlapping identities constitutional form can be one way to stabilise a diverse country. However, it can also give rise to resentment among the majority—be they anglophone Canadians or Castilian Spaniards—over the privileges of minorities.

My guess is this works only as long as the Quebecois mostly continue to live in a geographic distinct area. In other words – where diversity however it is measured exists at a macro but is minimized at a micro level. I imagine living and working together in a way that forms elite teams requires an approach that does more to smooth out whatever differences are perceived to exist and treat everyone as the same. (Warning – Youtube & profanity.)

 

The authors of the report argue for several other policies to protect and promote what they call “cultural liberty”, with certain caveats. For example, they support affirmative action, which, they say, has led to an increase in the number of black professionals in America, and has helped ethnic Malays in Malaysia and various minorities in India as well. But they lightly question the wisdom of letting such policies become entrenched, asking for example whether the children of affirmative action’s beneficiaries should themselves be eligible for a helping hand.

I suspect that such programs are very, very hard to dismantle. Differing cultural traits (which necessarily exist as long as people are assisted in keeping apart) will result in different outcomes, and different outcomes are a justification for keeping these programs intact.

The authors also propose treating “cultural goods” differently from other kinds when discussing trade. They give some of the oft-cited statistics about the cultural dominance of a few countries—for example, that America accounts for 85% of films screened worldwide. Their assumption is that, left to raw market forces, products from smaller cultures would be drowned out of the market. But rather than proposing restrictions on, say, importing American films, the authors propose allowing governments to take positive action to boost the production of their local fare. (Some trade agreements treat such support as an illegal subsidy.)

This must work because movies hav a discernible effect on the culture in different countries. Typical goods like the Honda Civic, Sony Walkmen, SAP ERP, AK-47, Google’s search engine and Coca-Cola must be very unlike movies and have no discernible effect on any country’s culture.

While the report is full of feel-good language and social-science jargon, like “participation exclusion” and “living mode exclusion”, it is an interesting first stab at marrying diversity and development, two subjects not often found side-by-side. The report is, by its own admission, short on data about just how bad the problem of cultural exclusion is around the world. But it estimates, probably not too wildly, that one in seven people in the world is a member of some kind of disadvantaged minority. When engineering a new constitution, founding fathers in Iraq, Afghanistan and other nations under construction, as well as those who would advise them, would do well to take the suggestions of this report to heart.

And I predict that as long as society encourages people to think of themselves as distinct from their neighbors, and their neighbors as distinct from themselves, we will only increase the number of people who are members of what the Economist calls “some kind of disadvantaged minority.”

Updated to include comments on Swiss and Belgian diversity. Also, second blockquote was not originally shown as quote. Also minor changes in one sentence for clarity.

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