Ethnic Remoteness Reduces the Peace Dividend from Trade Access
This paper shows that ethnically remote locations do not reap the full peace dividend from increased market access. Exploiting the staggered implementation of the Africa Growth and Opportunity Act (AGOA) and using high-resolution data on ethnic composition, violent conflict, and sectoral specialization for sub-Saharan Africa, we find that in the wake of improved trade access conflict declines less in locations that are ethnically remote from the rest of the country. We hypothesize that ethnic remoteness acts as a barrier that hampers participation in the global economy. Consistent with this, satellite-based luminosity data show that income gains from improved trade access are smaller in ethnically remote locations, and survey data indicate that ethnically more distant individuals do not benefit equally from positive income shocks when exposed to increased market access. These results underscore the importance of ethnic barriers when analyzing which locations and groups might be left behind by globalization.
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