Numerous studies have found that ethnic diversity is negatively associated with the provision of local public goods. However, these accounts neglect both the strong role of central institutions in the provision of many “local” public goods and the frequently positive correlation between diversity and the presence of less politically powerful ethnic groups. These factors suggest that existing diversity findings may be explained in some cases by central governments discriminating against areas inhabited by less powerful groups. This hypothesis is tested using data in village-level public goods provision in Northern India, supplemented by data on service provision in Kenyan villages and American cities. While there is evidence that the presence of socially powerful groups is positively associated with service provision, evidence for the diversity hypothesis is weak. The results suggest that failures of public services in diverse areas may reflect larger inequalities within the political system rather than local problems in cooperation.
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