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I. INTRODUCTION
THE design of public policies that promote interethnic cooperation remains poorly understood nearly twenty years after the appearance of Horowitz's seminal work.1 Recent research suggests that ethnically diverse societies are prone to corruption, political instability, poor institutional performance, and slow economic growth and that in the United States higher levels of diversity are related to lower provision of local public goods across municipalities. Addressing ethnic divisions is likely to be particularly important for Africa, the most ethnically diverse and poorest continent.
This article examines how central government nation-building policies affect interethnic cooperation, by comparing the relationship between local ethnic diversity and public goods across two nearby rural districts, one in western Kenya and one in western Tanzania, using colonial-era national boundary placement as a "natural experiment." Despite their largely shared geography, history, and colonial institutional legacy, governments in Kenya and Tanzania have followed radically different ethnic policies along a range of dimensions-most notably in national language policy, the educational curriculum, and local institutional reform-with Tanzania consistently pursuing the more serious nation-building policies during the postcolonial period.
The empirical evidence in this article suggests that the Tanzanian nation-building approach has allowed ethnically diverse communities in rural Tanzania to achieve considerable success in fund-raising for local public goods, while diverse communities in the nearby Kenyan region typically fail. To illustrate, while Kenyan communities at mean levels of ethnic diversity have 25 percent less primary school funding per pupil than homogeneous areas on average, the comparable figure for the Tanzanian district is near zero and statistically insignificant. Analogous results hold when jointly testing hypotheses for multiple public goods, including school infrastructure and maintenance of water wells, as well as school funding. These effects can be interpreted as the difference between the impacts of the Tanzanian nation-building program versus Kenyan policies, which, if anything, may have exacerbated ethnic divisions.
The case study presented in this article has methodological shortcomings, the most obvious being the small sample size of two countries, the lack of longitudinal data, and imperfect econometric identification. Nevertheless, the Kenya-Tanzania comparison provides suggestive microeconomic evidence that serious nation-building reforms can successfully bridge social divisions and affect important economic outcomes, like public goods provision. As such, this article contributes to recent debates on the roles of...