Ethnic Diversity and Economic Reform in Sub-Sahara Africa

Welfare in ethnically divided societies depends on privately owned resources as well as on a public good, namely cooperation between the various ethnic groups. Economic reforms designed to improve efficiency in the allocation of privately owned resources may have an ambiguous impact on welfare if they have a negative impact on inter-ethnic cooperation and political stability. This may provide an additional explanation of why reforms have failed in a number of countries of sub-Sahara Africa.