This book analyzes how social fractionalization and social integration determine sociopolitical evolutionary processes of countries, which in turn affect the dynamics of output per capita and economic growth. Chapter one develops a theoretical model setting up the relationship between social fractionalization and social integration on one hand and output per capita and economic growth on the other hand. Social fractionalization breeds discriminatory practices regarding government redistribution, which leads to inefficient allocation of resources away from production to struggle for political power in order to take control of the government's redistribution mechanism. Howver, social integrative processes may correct this inefficiency over time depending upon the degree of social fractionalization, the level of production technology, etc. Using the states in the U.S.A. as a case study, chapter two tests the theoretical model for empirical evidence. Chapter three examines the extent to which the large differences in foreign direct investment flows to countries in the developing world is explained by ethnic fractionalization.