4
However, if the relationship between economic liberalization and ethnic conflict is a positive and
a linear one, then we are presented with the following puzzle: What accounts for the divergence of
multiethnic societies, undergoing economic liberalization, in terms of their propensity for ethnic conflict?
For every federal multiethnic society, undergoing economic liberalization that has been engulfed in ethnic
conflict (Yugoslavia) there is at least one (the former Czechoslovakia) where ethnic conflict did not arise.
More importantly, multiethnic countries that have experienced high levels of economic liberalization in
the most recent period (Bulgaria, Czechoslovakia) have experienced little, if any, ethnic conflict.
Additionally, multi-ethnic countries at low levels of economic liberalization (Brazil, Malaysia) have
experienced the same, low levels of ethnic conflict.
3
Indeed, the most violent cases of ethnic conflict in the recent years (Yugoslavia, Sri Lanka,
Chechnya, Rwanda and Burundi, Indonesia) have occurred in countries at medium levels of economic
liberalization. Even within the same federal unit, i.e. the ex-Soviet Union, parts of it, the Baltic republics
(the states with the highest levels of economic liberalization), have emerged from secession without
ethnic conflict, while other parts of the ex-Soviet Union, the Caucasus republics (the states with medium
levels of economic liberalization), have engaged in violent ethnic conflict in their secession process.
Indeed, if all the structural characteristics (the existence of differential rates of resource allocation on the
basis of ethnic criteria, the emergence of political entrepreneurs actively engaged in electoral ethnic
bidding wars, and the asymmetrically distributed short-term effects of economic liberalization policies in
terms of income inequality and unemployment rates) are there, then why is there such a divergence in the
incidence of ethnic conflict? The aim of this thesis is to account, both theoretically and substantively, for
this rise in ethnic conflict in multiethnic societies undergoing economic liberalization.
I present an alternative perspective. I argue that the relationship between economic liberalization
and the propensity for ethnic conflict in multiethnic societies is a non-linear one, resembling an inverted-
U shape curve. Accordingly, I expect to find little, if any, ethnic conflict at low and high levels of
economic liberalization, and high levels of ethnic conflict at medium levels of economic liberalization.
Part of this disjuncture, between my argument and the conventional wisdom is methodological and part of
it is analytical.
Methodologically, I use a composite index operationalization for economic liberalization,
whereas the existing arguments rely upon a single-indicator operationalization for economic
liberalization. Hence, we do not rank the sample countries in the same order in terms of their degree of
economic liberalization. Analytically, I analyze the dynamics between economic liberalization and the
3
The list of countries is not exhaustive. Rather it serves as an illustrative example for my argument.
Convention