The ‘diversity debit’ hypothesis, developed in a famous article by Easterly and Levine in 1997 argues that ethnic diversity has a negative impact on social, economic, and political outcomes. According to this theory there is a negative relationship between ethnic diversity and public goods provision, due to different aspects related to the heterogeneity of the society such as: variety in ethnic group’s preference; less contribution to public goods; difficulties in solving problems that require collective action; or difficulties in governance when the elites are formed by diverse ethnic groups. The consequences of these negative relationships were in most cases low schooling and insufficient infrastructure, as well as political instability, underdeveloped financial systems, distorted foreign exchange markets, and high government deficits.
The study “Ethnic heterogeneity and public goods provision in Zambia” published by the World Institute for Development Economics Research of the United Nations University (UNU-WIDER), challenges the ‘diversity debit’ hypothesis as it shows that ethnic fractionalization is not clearly associated with the under-provision of public goods. Instead they argued that diversity can have a rather positive relationship with key welfare outcomes. According to the authors, instead of posing the question: ‘Why does ethnic diversity undermine public goods provision,’ we should ask ourselves why does it not?
According to the study, ethnic diversity does not necessarily undermine public goods provision in those cases when ‘diversity’ is not equivalent to ‘division’. They argue that division, rather than diversity per se, is what drives the diversity debit hypothesis. Studies in those places where ethnic identity is comparatively stronger than national identity show that is in those cases when we can clearly see remarkable inequalities in public goods provisions.
Regarding the case of Zambia, in order to understand why and how diversity does not necessarily undermine public good provision is important to look at different factors such as internal migration or the role of political institutions.
The paper shows that internal migration (namely, urbanization) in Zambia is relevant to understand this issue. Between 1964 and 1990, the urban population in the country increased from 10.5 to 39.4 per cent. Those who choose to move around the country instead of staying within an ethnic enclave are likely to me more tolerant and highly educated and thus less reluctant to diversity. As a consequence, internal mobility and urbanization will result in variations of ethnic heterogeneity and in the construction of diverse communities at a sub-national level.
The findings of this study on the case of Zambia, challenging the widely accepted ‘diversity debit’ hypothesis and showing that division rather than diversity undermines the equal access to public goods provision, connects closely with the vision of the Shared Societies Project and the findings of the Working Group on the Economics of Shared Societies[i] together with the work of other researchers [ii]. Thus, the findings of this study, showing that there can be a robust positive association between diversity and key welfare outcomes resonate with the view of the Shared Societies Project: diversity is not an obstacle for justice and fair distribution of opportunities and public services, in the contrary, it can be a strength and can foster the well-being of a society, provided that all sections of the community feel at home and are able to contribute to the society.
This study shows that division, rather than diversity, is what fosters some of the main problems and inequalities in the provision of public goods. Academics and policy-makers should look at this case in order to find yet another example of the importance of inclusion in order to build truly just and shared societies.
 Rachel M. Gisselquist, Stefan Leiderer and Miguel Niño Zarazúa: Ethnic heterogeneity and public goods provision in Zambia, WIDER Working Paper 2014/162
[ii] Alesina, A. and E. La Ferrara (2005) Ethnic Diversity and Economic Performance, Journal of Economic Literature 43, 3, pp. 762-800
“Birnir, J and D Waguespack “Economic Policy and Relevant Ethnic Groups.” Party Politics. 17(2): 243-260
Hall,R.and C.Jones (1999) Why do Some Countries Produce So Much More Output per Worker than Others? The Quarterly Journal of Economics, 114, 1,pp.83-86