Actionable insights straight to your inbox

Equities logo

Moody’s Sees Long-Term Economic Benefit to Fuller Racial Integration

Places with more integration also tended to have greater access to credit, larger companies and less crime (Image: Gerd Altmann, Pixabay).

Image source: The Macroeconomic Benefits of Racial Integration, Moody's Analytics

Fuller racial integration across the US could have a positive impact on the nation’s long-term economic growth, according to a new study.

In an analysis released Wednesday by Moody’s Analytics, a subsidiary of Moody's Corporation (NYSE: MCO ), researchers estimated the US real gross domestic product growth (GDP) over the next decade would increase from 2.4% to 2.7% annually if more communities become as integrated as some of the nation’s most diverse cities.

“This would be an economic game changer," the study said. "Of course, racial integration is at best slow to change, but even modest changes to encourage integrated communities could meaningfully boost our economy’s long-term growth."

After analyzing more than 450 counties across the country, researchers found less integrated areas experienced weaker GDP growth regardless of whether they were predominately white or non-white. 

Places with more integration also tended to have greater access to credit, larger companies and less crime, the study said.

Some of the most highly segregated areas in the US include Kings (Brooklyn) and Queens counties, New York; Essex County, New Jersey; Cook County, Illinois; and Wayne County, Michigan. The most racially integrated regions include the metropolitan areas of Dallas, El Paso, Philadelphia and Boston.

With the US on the cusp of becoming a nation where minorities will account for a majority of the population, desegregation is essential, the analysis said.

“The more racially integrated our society, the faster our economy will grow — GDP and house price growth are stronger,” researchers wrote.

“This is not simply an academic statistical result that if addressed eventually means a few extra dollars for a few families. It adds up to real money that could substantially improve the long-term financial success of all Americans.”


Source: Equities News

A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.