Using Fractionalization Indexes: Deriving Methodological Principles for Growth Studies from Time Series Evidence

Recent cross-country growth studies have found that ethnolinguistic fractionalization is an important explanatory variable of long-run growth performance. This paper highlights some limitations of cross-country studies by focusing on the time series evidence for South Africa. In presenting variation over time in a number of social dimensions, this paper adds longitudinal evidence on a range of dimensions that have been linked to long run economic development. Given South Africa's history of ethnic and racial politics, it constitutes a useful case study to explore the dynamics of the possible effects of ethnolinguistic fractionalization on growth. We introduce several new sets of fractionalization indicators for South Africa: ethnolinguistic, religious and cultural fractionalization, and a polarization measure. The results of this study provide important nuance to the existing body of evidence, for the use of fractionalization indices in growth studies.