Endogenizing Fractionalization

This paper identifies fractionalization as a consequence rather than solely a cause of poor institutions. The study investigates how heterogeneous agents in precolonial Africa relied on social distance-reducing signals to make trade with one another possible. The paper shows how colonial institutions created noise in these signals, inhibiting widespread cooperation. By stifling trade between diverse agents, colonial institutions contributed to Africa's poor economic growth.

Read the article at Cambridge Journals Online.