Ethnicity, governance and the provision of public goods

Ethnicity is an important institution and one that impacts on the quality of governance. This paper focuses on the behaviour of ethnic groups and specifically on their impact on the provision of public goods. The paper shows that ethnic heterogeneity results in under-provision of non-excludable public goods. On the other hand, such societies are associated with a high prevalence of patronage goods. The paper proposes some areas of research such as the economics of ethnic institutions, empirical investigation of the role ethnic groups on public goods provision, tax compliance and institutional reforms to improve governance.