The presence of economically and socially disadvantaged groups is a common feature of
most less-developed countries (LDC's). These" backward classes" share a common religion,
or belong to the same ethnic or tribal group or originate from a particular geographic region.
In each instance they form an easily-identifiable minority. The" untouchable" or" scheduled
castes" in India readily come to mind but even a casual observer of other South Asian, or
indeed African and Latin American countries can readily furnish his own examples.

This is an extensively revised version of Johyi6 Hopkln6 Wo-liZying PapcA Mo. 45 and
represents research originally begun by the first author while he was visiting the Department
of Economics and the Math Center at Northwestern University in 1978. A preliminary version
was presented at a seminar at the Development Research Center, IBRD in March 1979, and
some of the results of Section 2 were announced, without proof, in Economic L< 2Xt2AJ>, 2
(1979), 369-75.