The South Pacific region features enormous variation in state performance. While Polynesian nations such as Samoa have proved to be relatively successful post-colonial states, Melanesian countries like the Solomon Islands are increasingly categorised as 'weak', 'failing' or 'failed' states. Drawing on a range of comparative studies by economists and political scientists in recent years, this article argues that cross-country variation in ethnic diversity between much of Polynesia and Melanesia is a key factor in explaining differences in state performance across the South Pacific. It shows how different kinds of ethnic structure are associated with specific political and economic outcomes, including variation in political stability, economic development, and internal conflict from country to country. In so doing, it helps explain why some parts of the South Pacific appear to be failing while others are relative success stories - and why this is unlikely to change in the foreseeable future.