Tuesday, December 21, 2004

Ethnicity and Growth

While doing some research I came across this.


I wonder what people think IF this is a significant effect does it have any influence on the way that we should operate?

It would seem that according to some long term research done in Australia

The Prosperity Potential Indicator is a forward looking measure that attempts to gauge an area's economic growth potential based on certain socio-demographic features. ... Different features will produce different outcomes,
Features such as: The level of ethnicity; Income disparity; Propensity to
Spend; and Skills of the workforce.
If a particular area is characterised by a high levels of ethnicity (foreign born individuals), low workforce skills and income disparity the level of income generation and retained expenditure within the community will most
Likely be insufficient to support a robust economy.

Rather NOT politically correct I think.

Now if this is true (and it is unlikely that they are wrong at least in the Australian case) this is contrary to the common theory that diversity results in growth or dynamism, the same arguments used on the TV and by politicians constantly.

First we must ask is it better that we lie to ourselves about this and prevent this work from becoming public because it is in a sense dangerous? (Just like eugenics and talk of racial superiority is dangerous)

Secondly there are a number of ideas with potential policy implications
1) Is immigration is a considerably inferior (possibly even having a negative GDP/capita growth effect) method for up skilling compared to education of locals?
2) Are Immigration policies attracting immigrants that reduce the average skill (required skill) level of the population? If so do we possibly have a very poor immigration policy?
3) Is there a very bad integration between foreign and locals, resulting in a dual economy?

Note that this measure is not "current wealth" it is "long term prosperity potential". So it implies a fundamental problem. And they had many factors in their model so it is unlikely that there is some simple way to deal with the problem.

If this is indeed the case then should we do something about it? Or are the social implications of doing anything too negative?

What if a diverse nation like the USA or NZ or Australia that has social reasons for allowing diversity will never be able to maintain long term growth rates as fast as or provide services to its citizens like a country (eg Japan) that resists diversity?


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