Can ethno-linguistic diversity explain cross-country differences in social capital? A global perspective

Motivated by the inconclusiveness of empirical studies on the relationship between ethno‐linguistic diversity and social capital (SC) at various levels of regional aggregation, this paper provides new evidence on the relationship between the two variables at a global scale. A cross‐sectional analysis of 68 developed and developing countries applying two‐stage least squares estimations suggests not only that the cognitive dimension of SC (shared codes and languages) is highly important for SC formation across regional origin, but also that countries with a greater degree of linguistic fractionalisation have a lower SC stock. In particular, countries with fractionalized ethnic and linguistic groups, as captured by number of languages and measures of linguistic diversity, tend to have lower levels of social trust, fewer memberships in social organisations, and deteriorated social norms and structures. The negative ethnic fractionalisation effect on SC is also found weaker in higher‐income and in non‐African countries.