Forschungsjournal für Wirtschaftswissenschaften

Sociocultural Diversity, Competitiveness, Development

Zsuzsanna Bacsi

There is a belief that ethnic or cultural diversity would necessarily bring about difficulties of understanding and cooperation, lower economic performance, less stable economic and social processes and, ultimately a slowdown of economic output. On the other hand, ethnic fractionalisation and the resulting cultural diversity can create a pool of valuable resources comprising knowledge, traditions, skills, customs, that can initiate innovative ideas and creativity. The paper analyses the impacts of ethnic, linguistic and religious diversity on the competitiveness of countries, their income levels, and quality of life. measured by the Global Competitiveness Index. A cross-country multiple regression analysis of 155 countries was done, comparing different diversity indicators and assessing their impacts on GCI, GNI per capita and HDI. Linguistic diversity was found to positively influence economic performance, while ethnic fractionalisation had negative impacts only in high-income countries. Religious diversity did not show any significant impacts on any of the three assessed development indicators.