The purpose of this paper is to examine the thesis that civic nationalism is more likely to flourish in high-income multi-ethnic countries while ethnic politics is more likely to occur in multi-ethnic countries with low social and economic development. The term “civic nationalism” in this paper is used to denote the phenomenon that a single overarching shared identity exists regardless of the ethnic and other divisions in the society. Although there is an absence of statistical correlation between income and ethnic nationalism, countries with the most successful record of building civic national identity are high-income states. On the other hand, although not all low-income multi-ethnic states resorts to ethnic politics, the most divided ethnic party systems can be found in low-income countries. To explain this phenomenon, one must explore the causes of ethnic nationalist politics.