Using data from rural communities in which ethnic heterogeneity was induced within through involuntary resettlements policies in the 1960s, we estimate the exogenous effect of ethnic heterogeneity on individual participation in local organizations and households’ social network capital. The effect on participation depends on organizations’ political nature and the public nature of managed goods. We find no direct impact on social network capital but an indirect effect through interactions with identity and participation. Results do not confirm theoretical predictions of a negative relationship but show that ethnic heterogeneity can
encourage bridging connections, and, as such, fosters innovation and economic development.
