Understanding poverty

Ethnic diversity and poverty reduction by Edward Miguel

Many popular academic works have linked inefficiency in poverty
reduction and economic backwardness to ethnic diversity in terms of
caste, class, etc . To tackle this Edward Miguel argues for more nation
building policies; to forge a common national identity. The author cites
the example of rural Tanzania where to achieve considerable success in
local school building programs because of these nation building policies
in terms of linguistic, educational and institutional reforms. Kenya has
largely failed in this because these wide nation building programs that
Tanzania took, Kenya did not. Because Ethnic diversity can potentially
create conflict (not just in terms of violence), but also, when it comes to
allocation of public goods (social heterogeneity allocates public goods
inefficiently) , public policy, argues Miguel should be aimed at addressing
these social divisions with nation building taking a place at the top of
government policy.
India is one of the ten most ethno linguistically diverse countries on the
world.
Easterly and Levine (1997) in their seminal research article on the role of
ethnic diversity in economics argue that = 1 = ethnically diverse countries
had significantly the lowest per. Capitia economic growth rates than
homogenous countries during the post war period. On average diverse
societies were more likely to have experienced slow economic growth.
Examples of collective action problems:
1 = Peruvian Microcredit groups have higher loan default rates when
members are from different cultural backgrounds (here write about how
different groups have issues with trust and ostracism being weak in
diverse societies which contribute to this default )
2 = similarly = US municipalities with higher levels of racial diversity
collect considerably less funding for local public goods.
3 = Miguel and Gugertys work (in Kenya ) = rural Kenyan communities
with higher ethno linguistic fragmentation had lower contributions to
construct primary schools, had worse school facilities and worse
(relatively ) well maintenance.
Investment in education. Health and sanitation are critical for improving
the welfare of the people; it is necessary for economic development.
( therefore public goods in terms of social justice).

Why does this happen?

For this use social heterogeneity and public goods paper by those political
science people.
Plus the following points :
1 = differ in taste
2 = dont like mixing with each other
3 = there is recent empirical evidence suggesting = individuals prefer to
fund public goods that benefit their own ethnic group over others.
4 = social sanctions play a role in collective action. Difficult in imposing
social sanctions for different ethnic groups
5 = An important proposition that is stated in this paper is the relationship
between private cost and public benefit. Now, since public goods are
allocated through the political process, through the political market
effective mobilization and coordination (collective action) of the electorate
is required to get a stated set of public goods. In other words, for the
participants of the collective action public benefit accruing to all them
members in the electorate or the group must outweigh the private cost
(opportunity cost) of trying to induce the state to provide the required set
of public goods. Thus, the importance of collective action in the allocation
of public goods.
But in cases where society is heterogonous; that is, when society is
fragmented, collective action becomes weak because chances are that
people from different communities, because of different backgrounds
might not be willing to work together
How to solve the problems of collective action?
1 = promote power sharing across ethnic groups within governments or
other organizations. In such a system ethnic minorities have say in public
policy outcomes. Examples of scs performance in India (banerjee =
political economy of public goods : some evidence from India). But
however = it consolidates group identity as it institutionalizes the other
in politics. ( betel has often argues) (mn srinivas = caste relations in
rampura in 1948 were on the whole friendly but with the introduction of
electoral competition and adult franchise tensions between castes
increased. = the remembered village) also = not good because = can
increase political conflict across groups = Miguel.

2 = promoting dialogs and interaction among leaders of distinct ethnic

communities , create inter group norms
3 = another approach = central government led nation building . but =
british example = protestanism = English language. No space for catholic
French = eliminated in british national and social life = did not integrate. (
linda colley britons ) . can also create backlash = imposing hindi in
south india ( guha = india after Gandhi) .
4 = instead = social diversity, by itself is not bad. But communities not
working together; lack of trust, altruism , the process of othering and
social conflict is. Therefore = investment in social capital should take
place. Encourage social interaction, etc. In fact varshney (2002) highlights
the place of Bhiwande, near Bombay = where a determined effort to
create inter- religious peace communities in the 1980s successfully
averted communal violence in the aftermath of of the 1992 ayodhya
mosque attack. ( varshney = ethnic conflict and civic life) Therefore =
cross-group associational ties encourage social cooperation. Government
should incentivise these, help foster these groups.