Master's Thesis from the year 2017 in the subject Economics - Other, grade: 1,7, language: English, abstract: Many developing countries do not only suffer from weak institutions, poor economic performance and corruption, but also from separatist movements and violent civil conflicts. The question arises why some countries could achieve economic growth and development, while others never experienced considerable economic development and are trapped in a vicious circle of re-occurring violent conflicts and economic deterioration. Since developing countries tend to be more diverse in terms of ethnicity, language and religion and many civil conflicts appear to have an ethnic or religious component, diversity is regarded as a main cause of economic and political instability. Furthermore, many scholars consider higher levels of diversity in the least developed countries to be the crucial factor that leads to inefficient policy decisions and impedes growth and development.This master thesis addresses the question how diversity affects economic and political stability and elaborates appropriate parameters which are further used in a composite indicator (CI) to quantify a country's stability, respectively instability. The thesis is structured as follows:After a review of the literature on the relations between diversity and economic development and civil conflicts in chapter two, the historic and environmental conditions under which different ethnic and linguistic groups emerg...