The endless nexus between ethnic diversity, social exclusion and institutional quality of Pakistan

The purpose of this paper is to explore the relationship between ethnic diversity, social exclusion and institutional quality of Pakistan. Pakistan is enlisted among those countries that are suffering from bad institutional quality, which may be due to the less economic growth along with multifarious ethnic problems, higher misery and social exclusion. This study is an attempt of how ethnic diversity and social exclusion are encompassed to affect the institutional quality.

This study covers time series data from 1970 to 2015 and uses autoregressive distributed lags modeling approach to explore the underlying nexus among variables.

The finding of this study reveals that ethnic diversity and social exclusion are the enormous obstacles and deteriorate the institutional quality of Pakistan. In case of Pakistan, ethnic diversity is playing a fundamental role in the deterioration of institutional quality. Ethnic diversity has adverse effect on institutional quality which leads to hamper the economic prosperity; therefore, it has to be managed in efficient way by establishing a dense social network needed for growth promotion. This study also shows that socially excluded people are more involved in breaking the institutional rules (formal and informal) because they are not treated equal in society in all of aspects.

This study suggests that governments should play a vital role in creating secure and peaceful society through strong institutional quality and shaping the economic life of a country in a variety of ways such as to promote society toward more cohesiveness.

This study fills a significant gap in the literature as there is limited research on ethnic diversity and social exclusion in relation with institutional quality of Pakistan.