Is There an Association between Economic Growth and Ethnic Conflict in the 21St Century? A Study of Hindu-Muslim Violence in India

Abstract

Recurrent and pervasive Hindu-Muslim violence in India entails immense human, material, cultural and psychological costs. This thesis specifically focusses on its economic determinants. It explores the relationship between economic growth and the outbreak of Hindu-Muslim violent events using data from 22 Indian states across 29 years, 1990 - 2018. For this purpose, it employs negative binomial estimation with fixed effects, controlling for various socioeconomic, demographic, regional, and political factors. It also uses instrumental variable (IV) estimation, wherein percentage change in rainfall is used as an instrument for economic growth. This thesis finds no significant association between economic growth and Hindu-Muslim violent events for the panel under examination. It does however find some evidence of a negative correlation between economic growth in the previous year and violent events in the current year, indicating that the cultural effects of growth are not immediate. In some cases, the IV estimation yields a positive significant association between violence in the previous state-year and violence in the current state-year. This allows for identification of at-risk regions, and implementation of pro-active conflict prevention and inter-ethnic community building measures.