The study of the role of diversity for team and organizational performance is a very large component of the research performed in business schools. In this research project, Romain Wacziarg takes a macro approach, which is a complement to more micro/organizational-level research efforts. The project, using bilateral data, also allows the quantification of the cultural and human barriers to international economic interactions and transactions, and is of direct managerial relevance for the global economics and management area. There is a large and vibrant literature in management about managing across cultures; however, the approach in this research project is to place a more quantitative and analytically rigorous emphasis on these themes. The research was divided into two related areas: within countries and between countries.

Within countries, the research focus was to distinguish between overall cultural diversity, between group cultural diversity and ethnolinguistic diversity to uncover which of these dimensions matters most for political and economic outcomes. This strand of the proposal led to a new working paper (May 2014) entitled “Culture, Ethnicity and Diversity” with co-authors Klaus Desmet from Stanford and Ignacio Ortuno-Ortin from Universidad Carlos III de Madrid. In the paper, they investigate the relationship between ethnicity and culture, defined as a vector of traits reflecting norms, attitudes and preferences. Using surveys of cultural attitudes and values, they found that ethnic identity is a significant predictor of cultural attitudes, yet, surprisingly, cultural diversity is uncorrelated with ethnic diversity. They also found that civil conflict is more likely when culture and ethnicity reinforce each other, that cultural diversity tends to reduce the incidence of conflict and that ethnic fractionalization is not significantly related to conflict. The paper has already been presented in a number of seminars and conferences, including Stanford, Northwestern, Alicante, Bocconi, the London School of Economics, the Université Catholique de Louvain and the Paris School of Economics. The manuscript was submitted for publication to the American Economic Review, a top-tier economics academic journal. A key component of the research effort, supported by the CGM, was the involvement of a UCLA doctoral student who provided research assistant support.

Between countries research focused around the investigation of the relationship between differences in cultural attitudes, norms, preferences and values, and a variety of metrics of linguistic, religious and genetic distances, all meant to capture long-term divergence between populations. Again, the goal was to formally evaluate the often stated, but as yet untested, hypothesis that genealogical distance between populations is associated with divergence in a wide range of culturally transmitted traits. The main innovation is a comprehensive bilateral dataset of cultural distances, genetic distances, linguistic distances and religious distances, based on differences in answers to questions from the World Values Survey. They found that there is a significant positive bilateral correlation between measures of ancestral distance (e.g. linguistic or genetic distance) and cultural distance. This is consistent with the idea that as human societies diverge genealogically, they also diverge culturally. This opens up the possibility of a cultural explanation for why civilizations face all sorts of barriers to the transmission of technologies, trade, investment, etc., the subject of much of their past work. This paper is forthcoming in a book on the economics of language, and the CGM supported Professor Wacziarg to see this part of the project through to completion.