The relationship between ethnic heterogeneity and economic growth is complex. Generally, the trade-off between the economic benefits of diversity and the costs of heterogeneity implies that the relationship between diversity and growth depends on the size of the area used as the unit of observation. In this paper we perform a systematic analysis of the effect of the size of geographical units on the relationship between ethnic diversity and growth. We find a positive relationship for small geographical units and no effect for large areas and countries. We discuss a potential mechanism in the case of Africa. Volume XX, Issue X