Recently, Sachs et al. (2004) have argued in favor of a massive increase in foreign aid to Africa in order to escape from a poverty trap. They propose to increase the capital stock in one step, through a large, well-targeted infusion of foreign assistance. In this article we show that foreign...

Are cultural differences good or bad for economic development? Can cultural differences generate conflicts and, therefore, retard economic development? Or can cultural diversity spur creativity and improve economic welfare? These are the type of questions that this chapter addresses. There are...

This paper is an attempt to clarify the relationship between ethnic fractionalization, polarization and conflict. In recent years many authors have argued that ethnic fractionalization has a negative effect on growth because it increases the likelihood of conflicts. For this reason many growth...