Volha Charnysh: Diversity, Institutions, and Economic Development: Post-WWII Displacement in Poland
How does cultural diversity affect social organization? Do institutional differences between diverse and homogeneous communities have implications for economic development? This paper argues that heterogeneity not only impedes informal mechanisms of cooperation, but also increases demand for formal institutions. Greater reliance on formal law and public authority, in turn, facilitates economic development by enabling arm’s length transactions and encouraging entrepreneurship.