Abstract:
The objective of this study is to draw attention the conditions necessary to suatain ethnic peace. The exrecise was modivated by the experience of Maylasia and Sri Lanka. Both countries are democracies, have practiced ethnic preference policies and experienced racial riots. The basic hypothesis formulated and tested in this exercise is that countries that are open to foreign trade and investment are more likely to succeed in improving the quality of governance, achieving higher growth and reducing the probability of ethnic conflicts. The results of the regration analysis strongly favor the above hypothesis
