Easterly, William2014-06-302014-06-302000-05https://hdl.handle.net/10986/18849Modern political economy stresses "society's polarization" as a determinant of development outcomes. Among the most common dorms of social conflict are class polarization, and ethnic polarization. A middle class consensus is defined as a high share of income for the middle class and a low degree of ethnic polarization. A middle class consensus distinguishes development successes from failures. A theoretical model shows how groups - distinguished by class or ethnicity - will under-invest in human capital and infrastructure when there is "leakage" to another group. The author links the existence of a middle class consensus to exogenous country characteristics, such as resource endowments, along the lines of the provocative thesis of Engerman and Sokoloff (1997), that tropical commodity exporters are more unequal than other societies. The author confirms this hypothesis with cross-country data. This makes it possible to use resource endowments as instruments for inequality. A higher share of income for the middle class and lower ethnic polarization, are empirically associated with higher income, higher growth, more education, better health, better infrastructure, better economic policies, less political instability, less civil war (putting ethnic minorities at risk), more social "modernization," and more democracy.en-USCC BY 3.0 IGOAGRICULTUREAVERAGE LEVELBACKWARD PARTSBALANCED GROWTHBETTER HEALTHBLACK MARKETBLACK MARKET PREMIUMCAPITAL ACCUMULATIONCAPITAL INVESTMENTCITIZENSCIVIL WARCLASS LINESCLASS POLARIZATIONCLEAN WATERCOMMUNITY INCOME INEQUALITYCONSUMERSCORRUPTIONCOVARIANCE MATRIXCROSS-COUNTRY DATACROSS-COUNTRY DIFFERENCESCROSS-COUNTRY INCOMECROSS-COUNTRY STUDIESDEBTDEMOCRACYDEMOCRATIC ELECTIONSDEPENDENT VARIABLEDEVELOPMENT DIFFERENCESDEVELOPMENT DISADVANTAGEDEVELOPMENT ISSUESDEVELOPMENT OUTCOMESDEVELOPMENT REPORTDEVELOPMENT RESEARCHDEVELOPMENT SOCIETYDEVELOPMENT SUCCESSESDISTRIBUTIVE GOODSECONOMIC DEVELOPMENTECONOMIC EFFECTSECONOMIC GROWTHECONOMIC HISTORIANSECONOMIC POLICIESECONOMICS LITERATUREEDUCATION SPENDINGELASTICITYELASTICITY OF SUBSTITUTIONEMPIRICAL EVIDENCEEMPIRICAL GROWTH LITERATUREEMPIRICAL SECTIONEMPIRICAL WORKENDOGENOUS GROWTHENDOGENOUS GROWTH MODELENDOGENOUS OUTCOMESENDOGENOUS SEGREGATIONENDOGENOUS VARIABLESESTIMATION METHODETHNIC HETEROGENEITYETHNIC HOMOGENEITYEXOGENOUS COUNTRY CHARACTERISTICSEXOGENOUS FACTORSEXOGENOUS VARIABLEEXTERNALITYFACTOR ENDOWMENTSFOREIGN AIDGDPGDP PER CAPITAGEOGRAPHIC DISADVANTAGEGROWTHGROWTH EFFECTGROWTH INCREASEGROWTH RATEGROWTH RATESGROWTH REGRESSIONGROWTH REGRESSIONSHEALTH OUTCOMESHEALTH SERVICESHETEROSKEDASTICITYHIGH INCOME INEQUALITYHIGH INEQUALITYHUMAN CAPITALINCOMEINCOMEINCOME DIFFERENCESINCOME DIFFERENTIALSINCOME DISTRIBUTIONINCOME EQUATIONINCOME INCREASEINCOME QUINTILESINCOME REGRESSIONSINCOME SHAREINCOMESINDUSTRIALIZATIONINEQUALITYINEQUALITY EQUATIONINFANT MORTALITYINFRASTRUCTURE CAPITALINTEREST GROUPLAND INEQUALITYLANDOWNERS LORDLEVELS OF INCOMELIFE EXPECTANCYLIQUIDITYLOCAL COMMUNITYLOCAL SCHOOL FINANCELOG INCOMELOG INFLATIONLONG RUNLONG-RUNNING CONFLICTLOW SHARELOWER INCOMEM2MACROECONOMICSMASS EDUCATIONMEDIAN VOTERMIDDLE CLASSMIDDLE CLASS CONSENSUSMIDDLE CLASS CONSENSUS HYPOTHESISMIDDLE CLASS INCOME SHAREMIDDLE CLASS SHAREMIDDLE CLASS SOCIETYMIDDLE INCOME SHAREMIDDLE QUINTILESMILITARY MANMINIMUM MIDDLE CLASS INCOME SHARENATIONAL POLICIESNEIGHBORHOOD EXTERNALITIESNEIGHBORHOOD SEGREGATIONNEOCLASSICAL MODELNON-OIL COMMODITYNON-OIL COMMODITY EXPORTERSOIL EXPORTING NATIONSOIL PRODUCTIONOIL WINDFALLOIL-EXPORTING DUMMYOLD MIDDLE CLASSOLD STATE-SECTOR MIDDLE CLASSOLIGARCHIC ELITEOUTPUT COLLAPSEPARSIMONIOUS EXPLANATIONPARSIMONIOUS REGRESSIONSPER CAPITA GROWTHPER CAPITA GROWTH RATEPER CAPITA INCOMEPOLARIZED SOCIETIESPOLICY RESEARCHPOLITICAL BLOCSPOLITICAL COMMUNITYPOLITICAL ECONOMYPOLITICAL INSTABILITYPOLITICAL RIGHTSPOLITICAL SCIENCEPOLITICAL SCIENCE LITERATUREPOOR GROWTHPOOR POLICIESPOVERTY RATEPRIMARY ENROLLMENTPRIMARY SCHOOLPRODUCTION FUNCTIONPUBLIC GOODPUBLIC GOODSPUBLIC SPENDINGPUBLIC SUPPORTREAL EXCHANGE RATEREAL EXCHANGE RATE OVERVALUATIONREDISTRIBUTIVE DEVICERESOURCE ENDOWMENTSSECONDARY ENROLLMENTSECONDARY ENROLLMENT MIDDLE CLASSSOCIAL CAPITALSOCIAL CLUBSSOCIAL CONFLICTSOCIAL DOMINANCESOCIAL HIERARCHYSOCIAL INFRASTRUCTURESOCIAL OUTCOMESSTANDARD DEVIATIONTELEPHONESTRADE SHOCKSUNEQUAL DISTRIBUTIONUNIVERSAL SUFFRAGE10.1596/1813-9450-2346