ABSTRACT
To test th(' link l)('t\Veen din'rsity dlc.'cts and initial income, wc include interaction terms in all three regressions: these turn out to be significantly positi\'(' in two of the three cast'S (with ETHNIC I and LANG), as highcr din'rsity reduces grO\vth more in low-inconw than in high-incomc countries. This simple result is undoubtedly our most important Ol1e, since it providcs the only dircct test dOl1c to date or \\'hether the low incomes obser" .... d to correlate with din'rsity arc a result or a cause of that diwrsity.
