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AUTHOR’S PERMISSION
Economic Liberalization and the Propensity for Ethnic Conflict: Political Entrepreneurs,
Ethnic Mobilization and Economic Resources
Nick Biziouras
Doctoral Candidate
Department of Political Science
University of California at Berkeley
## email not listed ##
Abstract
Since 1945, two processes have indelibly marked countries: the continuing increase in the levels
of economic liberalization and the explosion of interethnic, intra-state conflict. Many scholars have
argued that economic liberalization leads to greater levels of economic development and by implication to
more effective democratic institutions. Similarly, many scholars have argued that ethnic conflict is the
result of low-quality democratic institutions and low levels of economic development. This paper
synthesizes these two bodies of literature and investigates the causal mechanisms between economic
liberalization and ethnic conflict.
Using large-N quantitative methods scholars who stress the causal links between factoral models
of trade integration and occurrences of state disintegration in multiethnic have argued that economic
liberalization and ethnic conflict are positively and linearly linked. Alternatively scholars who stress
domestic-level explanations have argued that economic liberalization leads to state shrinking, especially
of social safety net policies, thus inducing mobilization along ethnic lines and ultimately conflict.
However, the empirical record for this conventional wisdom is often spotty and subject to methodological
biases, especially in their measurement of economic liberalization.
Using a large-N multivariate statistical method combined with two intensive case studies (Sri
Lanka and Bulgaria) we argue that the relationship between economic liberalization and ethnic conflict in
multi-ethnic societies is a non-linear, inverted-U shape. We measure economic liberalization in a
composite index manner and we show that it leads to ethnic conflict in the countries that have undergone
medium levels of economic liberalization. Our argument conceptualizes ethnic mobilization as a
collective action problem, thus investigating both the role of political entrepreneurs as leaders of the
mobilization drive as well as individual ethnic group members as potential participants in this
mobilization.
Both in conditions of low and high economic liberalization, political entrepreneurs cannot
credibly provide their potential members with significant material benefits, i.e. the payoff structure of the
individual members, because of the inherent uncertainty over the success of the ethnic mobilization and
the limited resources of the political entrepreneurs, cannot be credibly altered. At low levels of economic
liberalization, the state dominates the mechanisms of resource allocation and at high levels of economic
liberalization, the market dominates the mechanisms of resource allocation. In the former case the
political entrepreneur cannot credibly promise his members a greater share of allocated resources and in
the latter case, the political entrepreneur cannot promise his members a greater share of allocated
resources.
It is in conditions of medium-level economic liberalization, that political entrepreneurs can
provide their potential members with significant and credible material benefits because it is at these levels
of economic liberalization that potential members rationally perceive that ethnically-based political
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