Genetic Diversity and Economic Development

If we think that diversity can have an impact on organizational outcomes, it would make sense to also look at higher-level outcomes. Ashraf and Galor (2013) do that. They study the effect of genetic diversity on economic development at the country-level. They find that an intermediate level of genetic diversity is associated with ‘the highest’ level of economic development. The results show that there is an ‘inverted-U’ relationship between genetic diversity and economic development: a trade-off exists between the positive and negative effects of diversity on productivity.

Based on their results, the authors indicate that (Ashraf & Galor, 2013: 38)

(i) increasing the diversity of the most homogenous country in the sample (Bolivia) by 1 percentage point would raise its income per capita in the year 2000 CE by 39%, (ii) decreasing the diversity of the most diverse country in the sample (Ethiopia) by 1 percentage point would raise its income per capita by 21%…

The following image extracted from the paper shows this curvilinear relationship:

Ashraf and Galor 2013

Ashraf and Galor (2013)

They explore some mechanisms through which genetic diversity has an impact on economic development. In particular, they look at interpersonal trust and scientific knowledge creation. They find that (Ashraf & Galor, 2013: 8)

…the analysis indicates that genetic diversity is negatively associated with the extent of cooperative behavior, as measured by the prevalence of interpersonal trust, and positively associated with innovative activity, as measured by the intensity of scientific knowledge creation.

This study has received some attention from news sites. Check one of the author’s website here.

References

Ashraf, Q., & Galor, O. (2013). The’Out of Africa’hypothesis, human genetic diversity, and comparative economic development. The American Economic Review, 103(1), 1.

 

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