Does ethnic polarization stimulate or relegate trade and environmental performance? A global perspective
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Does ethnic polarization stimulate or relegate trade and environmental performance? A global perspective Nawaz Ahmad1 · Saqib Amin2 Received: 12 November 2018 / Accepted: 15 October 2019 © Springer Nature B.V. 2019
Abstract Well-organized ethnic diversity plays a crucial role in performing quality environment and international trade. Discrimination, segregation and bigotry are escalating the pressure on world’s population and spreading prejudice, later as a consequence may lead to social exclusion. This study aims to investigate whether ethnic or religious diversity affects international trade and the environmental performance by using the data of 187-countries (including 56 high-income, 102 middle-income and 29 low-income countries) of the world. The results indicate that diversity (ethnic and religious) plays a significant positive impact on international trade and environmental performance of high- and middle-income countries and vice versa with low-income countries. This study further suggested that diversity cannot be abbreviated; however, its disastrous effects may be curtailed by providing equal opportunities and peace in society to ensure the well-being of people through cohesiveness. Keywords Ethnic diversity · Religious diversity · International trade · Environmental performance JEL Classification O11 · F10 · F22 · Q50 · Z13
1 Introduction Diversity is the global phenomenon that has been a significant feature of prosperity as well as peace for any country. Every year, the flow of diversified groups with totally different culture and norms is growing in volume (Barth 1998; Bates 2000; Castles 2000; Sung 2014). Developing trust and economic development among various nations may assist to boost the trade via ethnic diversity (Alesina et al. 2003; Awaworyi Churchill and Laryea 2017) therefore, it seemed more difficult or challenging for assorted nations to be engaged in international trade while designing agreement across legal and political * Saqib Amin [email protected]; phd‑[email protected]
Nawaz Ahmad [email protected]; [email protected]
1
The University of Lahore (UOL), Lahore, Pakistan
2
National College of Business Administration and Economics (NCBA&E), Lahore, Pakistan
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boundaries (Greif 2005; Rodriguez and Rodrik 2000). However, the increase in transaction costs associated with ethnic diversity may also reduce the likelihood of international trade (Churchill 2017). Consequently, this generates a multicultural society which may lead to clashes and conflicts within society as well as organizations. Thus, diversity among the firms parade foreign markets which successfully may increase the global welfare of the society. On the other hand, most of the empirical studies examine relationship between diverse society and trade through gravity of the models (Gould 1994). Moreover, positive relationship has been observed in the literature between diversity and trade such as an increase of ethnic groups of 10% will enhance 1.5%
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