Modernization, social identity, and ethnic conflict

The lack of a shared national identity is often blamed for ethnic conflict and low economic development. This raises the question: does society’s modernization (in particular, industrialization) lead to identity, thereby bringing good outcomes in development? paper theoretically examines question using contest model augmented with multiple production sectors social identification. analysis shows that as proceeds, society shifts an equilibrium universal level conflict, high output if pride high, differences are not salient people’s minds, resources abundant, or institutions quality. Otherwise, worse political outcomes. suggests nation-building policies play critical role overcoming negative effects under latter situation.