Social Divisions and Access to Public Goods

This is an example of how caste heterogeneity - or just a caste system - can complicate economic development:

Our empirical analysis documents that communities that are heterogeneous in terms of caste within the majority Hindu religion are likely to have lower access to tap water than correspondingly homogeneous communities. Historical divisions created by the caste system in India may generate rivalry associated with the usage and sharing of public goods, and thereby reduce the coordination required to get the state to provide more public goods. By contrast, communities that are fragmented across religions are likely to have more access to tap water than correspondingly homogeneous communities. This may be because the risk of internal conflict due to religious divisions (a common source of violent riots in India) cause the state to send more public goods to areas fragmented by religion. 

That is from the conclusions of the draft of this article by Divya Balasubramaniam, Santanu Chatterjee, & David B. Mustard, in Economica (January 2014).  A draft (September 2012) is here. The name of the article is "Got Water? Social Divisions and Access to Public Goods in Rural India."

We should think about how to promote cohesion within societies with high degree of heterogeneity. The answer might be to build (more) trust, which is easier to say than do. 

Wikipedia has a fascinating entry of the Caste System in India.