Racism Review: Does Cultural Diversity Promote Economic Growth?

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By Racism Review

Diversity has sometimes been considered as an abstract principle, divorced from macro-economic trends and global realities. Research by Quamrul Ashraf and Oded Galor of Brown University, suggests otherwise. In a paper released by the National Bureau of Economic Research in 2011, Ashraf and Galor crystallize their findings on the interplay between cultural assimilation and cultural diffusion in relation to economic development. They theorize that pre-industrial societies in agricultural stages of development may have benefitted from geographical isolation, but the lack of cultural diversity had a negative impact on the adaption to a new technological paradigm and income per capita in the course of industrialization. This “Great Divergence” in the developmental paths of nations has occurred since the Industrial Revolution.

Ashraf and Galor indicate that cultural assimilation enhances the accumulation of society-specific human capital, reducing diversity through standardization of sociocultural traits. Cultural diffusion, by contrast, promotes greater cultural fluidity and flexibility that expands knowledge allowing greater adaption to new technological paradigms.

One of the prominent questions long debated by scholars is why China failed to industrialize at the time of the Industrial Revolution and suffered from “economic retardation,” a question raised by Joseph Chai in Chapter VI of his new book An Economic History of Modern China. In their paper, Ashraf and Galor outline the early benefits of China’s geographical isolation as the “Middle Kingdom” or the center of civilization as evidence of the benefits of cultural assimilation in the agricultural stage of development. They also refer to the state-imposed isolation throughout the Ming (1368-1644) and Ching eras (1644-1911) that caused China to remain impervious to external influences. Although Ashraf and Galor do not expand upon the further ramifications of their theory in this example, the absence of cultural diffusion was clearly a major factor in China’s late development in the sciences and technology.

What does all this mean for diversity practitioners in the United States today? Clearly, the important benefits of cultural diversity need to be understood in broader, global, and historic terms. As Alvin Evans and I argue in Bridging the Diversity Divide: Globalization and Reciprocal Empowerment in in Higher Education, globalization is a catalyst for diversity change, representing an urgent mandate that can no longer be ignored. With the erosion of barriers of time and place, rapid evolution of technological modes of communication, increasing diversity of the American population, rising demands from diverse consumers, and importance of talent as a differentiator in organizational performance, organizations now must focus upon creation of inclusive talent management practices. In our forthcoming book, The New Talent Frontier: Integrating HR and Diversity Strategy (Stylus, 2013), we examine this global imperative and the emergence of common themes in diversity transformation across all sectors including private corporations, not-for-profits, and institutions of higher education.

As Richard Florida, author of The Rise of the Creative Class, puts it in his blog that discusses Ashraf and Galor’s contributions:

It’s time for diversity’s skeptics and naysayers to get over their hang-ups. The evidence is mounting that geographical openness and cultural diversity and tolerance are not by-products but key drivers of economic progress. . . . Indeed, one might even go so far as to suggest that they provide the motive force of intellectual, technological, and artistic evolution.

Read original blog entry here.

This piece was reprinted by Migrant Tales with permission.

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