A key challenge that many nations face in the 21st century is to build societies that not only are able to peacefully accommodate increasing ethnic diversity but also to leverage its potential benefits. This is not a straightforward task. Ethnically diverse communities tend to provide fewer public goods to their citizens (e.g. Alesina et al. 2004, Alesina and La Ferrara 2005) and are less likely to voice common priorities (e.g. Ban et al. 2012). With ethnic identities often coordinating political competition as well, it is perhaps not surprising that violent conflict is more likely in ethnically polarised countries and regions (e.g. Montalvo and Reynal-Querol 2005, Esteban et al. 2012, Jha 2023 and Figure 1). With 82.1 million people around the world forcibly displaced due to persecution and conflict in 2020, and widespread economic migration, the challenge of building resilient inter-ethnic peace is one faced not only by societies that have been diverse historically but increasingly in nations and communities with less experience navigating a diverse setting.

What can economic theory, in combination with the historical experiences of these communities, tell us about the necessary conditions for resilient inter-ethnic peace, and how these can be fostered?

This book presents a synthesis of key recent advances in political-economy research on the various approaches and strategies used in the process of building nations throughout modern history. It features chapters written by leading scholars who describe the findings of their quantitative analyses of the risks and benefits of different nation-building policies. The book is comprised of 26 chapters organized into six sections, each focusing on a different aspect of nation-building. The first chapter presents a unified framework for assessing nation-building policies, highlights potential challenges that may arise, provides a summary of each of the other chapters, and draws out the main lessons from them. The following chapters delve into the importance of social interactions for national identification, the role of education, propaganda and leadership, external interventions and wars, and the effects of representation and redistribution. The book offers a nuanced understanding of effective nation-building policies.