Amy Chua's World on Fire is a stimulating book that links the 1990s spread of democracy and market reforms with perceptions of increasing ethnic violence. Chua points out that many developing countries have "market-dominant" minority groups that wield disproportionate economic power. In the presence of such minorities, Chua argues, the simultaneous introduction of markets and democracy can lead to ethnic violence. Market liberalization can exacerbate minority control over the economy, while democratization provides incentives for demagogues to target the minority group. While her model has explanatory power in some contexts, the book pays insufficient attention to social science techniques and evidence. She defines her explanatory variables, democracy and markets, too broadly to facilitate a test of her theory. In discussing incidents of ethnic violence and tension, her approach to evidence is anecdotal, and she does not consider the number and intensity of cases where democratization and markets may have reduced ethnic tension. Recent studies suggest that the number and intensity of ethnic conflicts are in decline around the world, an important finding that should lead to caution in hastily adopting policies based on Chua's analysis. Both democratization and a reduction in ethnic tension, it is argued, can be facilitated by the international community.


Law and Economics

Date of this Version

February 2004