How can economic decline increase competition between ethnic groups?

Economic decline—including stagnation, deterioration, or total collapse—serves as a significant source of state destabilization that intensifies competition between ethnic groups. This process typically unfolds through several key mechanisms:1

• Resource Scarcity and Inequality: When economic opportunities, access to land, and standards of living diminish, groups often face inequitable options. This creates resentment and heightens tensions as groups compete for increasingly scarce resources.1
• Zero-Sum Dynamics: Unlike material goods that can be divided, ethnic and religious identities are often viewed as indivisible. When politics is structured around these identities, competition becomes a zero-sum game where one group’s gain is perceived as another’s loss.2
• Frustration and Mobilization: Economic downturns can exacerbate feelings of relative deprivation. When existing social structures fail to adapt to rapid economic transitions, the resulting frustration can be exploited by political entrepreneurs who mobilize voters along exclusionary sectarian lines rather than through inclusive, programmatic policies.12
• Erosion of Compromise: As identity politics takes precedence, the focus shifts away from distributive economic matters where bargaining is possible. This polarization makes it harder for politicians to offer encompassing programs, further entrenching ethnic divisions and increasing the risk of conflict.2