We estimate the effect of the share of ethnic groups included in the central government on economic growth, distinguishing between democracies and autocracies in a panel of 41 Sub-Saharan African countries over the period from independence to 1999. We exploit evidence from the Ethnic Power Relations database, which categorises the politically relevant ethnic groups regarding access to state power. We take advantage of the time variation of political participation, using Fixed-Effects and Difference-GMM estimations. Our dynamic-panel growth models display a robust positive effect of the proportion of included groups in democracies. Such an effect is offset in autocracies, and the difference is often significant. This finding withstands the introduction of various controls, outlier tests, and specification checks. Our results support the view that institutional improvements must accompany the promotion of inclusiveness in low-income and weakly-institutionalised countries.
This paper features a growth model with an appropriative contest and a common-pool investment game between politically organised rival ethnic factions. I determine how the long-run equilibrium coalition shapes incentives to invest, show the existence of a unique steady state, and investigate how the ease to capture rents affects economic performance. The use of numerical simulations concerning a global sample of countries demonstrates that contest intensity can sometimes be beneficial, despite wasteful grabbing behaviours, due to a mechanism related to the concentration of power. When rents become easier to capture, dominant groups have an incentive to expand their influence further. This adjustment can be beneficial as these groups contribute most to capital accumulation.