Ethnic Diversity, Public Spending and Political Regimes

Sugata Ghosh and Anirban Mitra

MPRA Paper from University Library of Munich, Germany

Abstract: We study the relationship between ethnic diversity and public spending under two different political regimes, namely, democracy and dictatorship. We build a theory where political leaders (democratically elected or not) decide on the allocation of spending on different types of public goods: a general public good and an ethnically-targetable public good. We show that the relationship between public spending and ethnic diversity is qualitatively different under the two regimes. In particular, higher ethnic diversity leads to greater investment in general rather than group-specific public goods under democracy; the opposite relation obtains under dictatorship. We also discuss some implications of our results for economic performance and citizen's welfare.

Keywords: Ethnic diversity; Public goods; Democracy; Dictatorship; Economic performance. (search for similar items in EconPapers)
JEL-codes: D72 D74 H40 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cdm, nep-pol and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:75546

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