The Social Diversity and Institutional Development: Are they Related?
Up to the present time it is generally recognized that the demand for bad institutional environment causes falling of certain countries into institutional traps. We suggest that an important factor suppressing economic development and bringing about bad institutional environment could be a respectively high level of social diversity which especially matters for the transitional countries. Thus, a certain types of heterogeneity of the society which are feasible for empirical test are in focus of our attention. Some of them such as genetic, religious, cultural could be considered as operating in long run periods, other ones steaming mainly from the lack of the social capital accumulation are of respectively short run type and probably could be subject to a control from the society. We introduce a simple theoretical model of attempts for reaching a consistent decision considering a society as a set of individual groups seeking to maximize their own goal functions. An equilibrium solution of the problem suggests that the total efforts of the society to reach a consistent decision is proportional to the level of its diversity, do, it is to expect that a more heterogeneous country prevail lags a one being more uniform. The sense of identification and the alienation indices describing individual groups are important in our analysis. We test the model using cross country statistical data on institutional quality of the economy and society structures.
Keywords: Quality of Institutions, Deversity of the Sosiety, Social Capital, Theoretical Model, Sense of Identifivation, Alienation Indices
Dr. Nikita Suslov
Professor, Economic faculty, Chair of Economic Theory, Novosibirsk State University