Tuesday 16 July 2019
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Does Diversity Lead To Economic Growth

Does Diversity Lead To Economic Growth

By: Alejandro Martinez, Director, Market Intelligence

In past Provoke Weekly publications, we’ve talked about how diversity makes us smarter and more productive. So, if diversity can make us more productive at the corporate level, could it also be reflected at the macroeconomic level? In other words, can diversity lead to economic growth?

We found that 80% of states with a high Gross Domestic Product Per Capita (GDP Per Capita) have more than 50% diversity (to measure diversity we used the ESRI Diversity Index, which is the likelihood that two people from the same region belong to a different race or ethnic group. For example, a diversity index of 60 means that there is a 60% chance that two people chosen at random are from different races/ethnicities). The table below shows the most and least diverse states in the U.S.

Diversity Index 3

We also found that there’s almost twice the number of states that have a direct relationship between diversity and GDP Per Capita (states in green in the chart below show HIGH Diversity states with a HIGH GDP Per Capita; and LOW Diversity states with a LOW GDP Per Capita).

Diversity Index (2)

Although we can’t say that all states that have high diversity also have a high GDP Per Capita, we do see a correlation between economic growth and diversity. Some speculators say that growth is what attracts diverse populations in the first place, but there are studies that disprove this hypothesis and claim that high levels of diversity is what helps us adapt to better technologies and ideas. Their conclusion: “Diversity spurs economic development and homogeneity slows it down.

We strongly believe that cultural diversity has a positive impact at both, the corporate and macroeconomic level. Diversity brings about variety in abilities, experiences, and cultures, which may be productive and lead to innovation and creativity. The best examples may be N.Y. and L.A., which are highly racially mixed, and are constant innovators in business and the arts.

To learn more about diversity and how to reach a diverse audience, follow Dieste Inc. and be sure to subscribe to Provoke Weekly for the latest trends in multicultural marketing.





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