The impact of ethnolinguistic diversity on entrepreneurial activity: a cross-country study

摘要

The relationship between language diversity, ethnic fractionalisation and economic activity is both complex and open to heated debate. In this study, we empirically examine the impact linguistic diversity and ethnolinguistic fractionalisation has upon entrepreneurial behaviour at the country level of analysis. Utilising an economic club theory approach to social capital, this study supplements the growing socioeconomic literature that examines the relationship between diversity and economic growth. We find that while ethnolinguistic diversity is associated with higher levels of entrepreneurial activity, diversity is also associated with higher failure rates. We also find that income disparity is closely related to entrepreneurial activity.