Coalition Diversity and Economic Growth

We argue that diversity among political decision-makers enhances economic development in dictatorships, and, to a lesser degree, in democracies. Different groups bring different preferences, perspectives to the table. Hence, whenever more social groups are represented in policy-making processes, we expect more comprehensive policies. Related, broad representation incentivizes politicians to strike durable policy bargains that are conducive to investment. Finally, broad representation spurs increased variety and better evaluation (and thus selection) of ideas, thereby enhancing efficiency and innovation. However, the effect of diversity will vary across regime types. In autocracies there are fewer institutional guardrails compared to democracies, resulting in the actors being of higher importance. We test the implications of our argument by drawing on two recent datasets. First, we use V-Dem’s coding of social groups entering regime support coalitions to construct a group-based measure of heterogeneity of the broader governing coalition. Second, we zoom in on the most powerful decision-makers and leverage new measures from our Paths to Power dataset on the background of cabinet ministers. Doing so, we construct and test micro-level comprehensive measures of heterogeneity (along different dimensions) among the primary decision makers in a country, and find a positive, overall relationship between coalition diversity and growth.