Nonetheless, some essential national policies
that characterize a sovereign state (defense, foreign policy, basic characteristics
of the legal system) are indivisible and must be shared among the whole pop-
ulation. The costs of heterogeneity in the population have been documented
empirically in a recent literature on the political and economic effects of ethno-
linguistic fractionalization, which is shown to be inversely related to measures
of economic performance, economic freedom, and quality of government.14 As
noted by Wittman (2000), such political costs are likely to depend not only on
the degree of heterogeneity of preferences, but also on the quality of institutions
through which preferences are mediated and turned into policy.
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