Published online by Cambridge University Press: 28 February 2019
How does an increase in cultural diversity affect state–society interactions? Do institutional differences between heterogeneous and homogeneous communities influence economic activity? I argue that heterogeneity not only impedes informal cooperation but also increases demand for third-party enforcement provided by the state. Over time, the greater willingness of heterogeneous communities to engage with state institutions facilitates the accumulation of state capacity and, in common-interest states, promotes private economic activity. I test this argument using original data on post-WWII population transfers in Poland. I find that homogeneous migrant communities were initially more successful in providing local public goods through informal enforcement, while heterogeneous migrant communities relied on the state for the provision of public goods. Economically similar during state socialism, heterogeneous communities collected higher tax revenues and registered higher incomes and entrepreneurship rates following the transition to the market. These findings challenge the predominant view of diversity as harmful to economic development.
I am grateful to Eric Arias, Michael Bernhard, Bart Bonikowski, Timothy Colton, James Conran, Aditya Dasgupta, Grzegorz Ekiert, Ryan Enos, Noam Gidron, Avner Greif, Daniel Hidalgo, Alexander Hertel-Fernandez, Leslie Finger, Jeffry Frieden, Jeffrey Kopstein, Isabela Mares, Brendan McElroy, Jan Pierskalla, Amanda Robinson, David Skarbek, George Yin, Yuhua Wang, the editors of the APSR, and three anonymous refereers for helpful comments and ideas. I am also indebted to Paweł Swianiewicz for sharing data on municipal budgets. I would also like to thank the participants of the 3rd Politics and History Network Conference at Princeton University, the Comparative and IPE Workshops at Harvard University, the Political Theory Project at Brown University, the Comparative Politics Research Workshop at Ohio State University, the Historical Legacies and Memory Workshop at the University of Michigan, and the Legacies of Violence Workshop at NYU-Abu Dhabi. Fieldwork for this project was funded by the Social Science Research Council’s Mellon International Dissertation Research Fellowship (IDRF), and the Krupp Foundation’s Center for European Studies Graduate Dissertation Research Fellowship. Replication files are available at the American Political Science Review Dataverse: https://doi.org/10.7910/DVN/AW6L1P.
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