Is democracy beneficial for growth in countries with low ethnic diversity?


We study the impact of democracy on economic growth for a panel of the most and least ethnically diverse nations as documented by Easterly and Levine (1997). Using a GMM system to capture endogeneity and simultaneity, we find that democracy exerts a direct positive impact on growth, in addition to ameliorating the adverse effects of ethnic diversity on growth, unlike some of the results of the previous empirical literature

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