Ethnic diversity, economic performance and civil wars

We develop a con‡ict model linking dissipation to the distribution of the population over an arbitrary number of groups. We extend the pure contest version of the model by Esteban and Ray (1999) to include a mixed public-private good. We analyze how the level of dissipation changes as the population distribution and the share of publicness of the prize change. First, we …nd that, in case of pure private goods, the dissipation-distribution relationship resembles the fractionalization index. This may explain the sensitiveness of empirical evidence on the impact of ethnic diversity with respect to outcome (growth, incidence of civil wars) and index (fractionalization, discrete polarization). Second, we …nd that, in case of pure private goods, smaller groups always contribute more and so the fractionalization index under-estimates their weight. Indeed, we …nd that the fractionalization index under-estimates the true level of dissipation. Key words: ethnic diversity, public-private goods, polarization, fractionalization. JEL Classi…cation codes: D72, D73, D74, H42. I am indebted to Ola Olsson and Mario Gilli for many useful discussions. I have bene…ted from comments Masayuki Kudamatsu. I am grateful to Debraj Ray for comments on an earlier draft. I am also grateful to seminar participants at the University of Gothenburg and at the "Global costs of con‡ict" workshop at DIW Berlin. All remaining errors are my own.