No one true path: uncovering the interplay between geography, institutions, and fractionalization in economic development

Abstract

Abstract Do institutions rule when explaining cross‐country divergence? By employing regression tree analysis to uncover the existence and nature of multiple development clubs and growth regimes, this paper finds that to a large extent they do. However, the role of ethnic fractionalization cannot be dismissed. The findings suggest that sufficiently high‐quality institutions may be necessary for the negative impact on development from high levels of ethnic fractionalization to be mitigated. Interestingly, I find no role for geographic factors—neither those associated with climate nor physical isolation—in explaining divergence. There is also no evidence to suggest a role for religious fractionalization. Copyright © 2009 John Wiley & Sons, Ltd.

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