The Handbook on the Political Economy of War
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The Handbook on the Political Economy of War

Edited by Christopher J. Coyne and Rachel L. Mathers

By defining political economy and war in the broadest sense, this unique Handbook brings together a wide range of interdisciplinary scholars from economics, political science, sociology, and policy studies to address a multitude of important topics. These include an analysis of why wars begin, how wars are waged, what happens after war has ceased, and the various alternatives to war. Other sections explore civil war and revolution, the arms trade, economic and political systems, and post-conflict reconstruction and nation building. Policymakers as well as academics and students of political science, economics, public policy and sociology will find this volume to be an engaging and enlightening read.
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Chapter 4: Can’t We All Just Get Along? Fractionalization, Institutions and Economic Consequences

Peter T. Leeson and Claudia R. Williamson


Peter T. Leeson and Claudia R. Williamson 4.1 INTRODUCTION It’s often said that “variety is the spice of life.” When it comes to kinds of people, variety can be a spice; but it can also be poison. On the one hand, the gains from specialization and exchange under the division of labor are potentially larger when individuals are diverse. On the other hand, the differences between individuals can be a divisive force that catalyzes destructive conflict. This chapter considers social differences, how institutions affect them and their relationship to economic outcomes. Broadly speaking, consideration of such questions falls under the rubric of studies examining what the social science literature calls “fractionalization.” A fractionalized society is one with numerous, socially distant groups. The social distance in question, or what is the same, the relevant lines of demarcation distinguishing different social groups, can have many sources.  In principle, any cause for notable difference between the members of various groups may be a source of social distance. In practice, social scientists have focused their attention on several common sources of such distance: ethnicity, language and religion. This makes sense since important social cleavages often fall along ethno-linguistic and/or religious lines. Social scientists have attempted to measure fractionalization in several ways. In the early 1960s a team of Soviet researchers constructed the first such measure, which reflects the probability that two randomly selected individuals belong to different ethnolinguistic groups. Using this measure, fractionalization increases when there are many small social groups and reaches its...

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