It is well known that economies of scale that are external to the individual decision makers can lead to self-fulfilling expectations and the multiplicity or even indeterminacy of equilibrium. We argue that the importance of this source of multiplicity and indeterminacy may be overstated in representative agent models, as they ignore the potential stabilizing effect of heterogeneity. We illustrate this in a version of Matsuyama's (1991,1992) two-sector model with increasing returns to scale. Given an assumption that excludes stationary states at the corners, two main results are shown. First, sufficient homogeneity with respect to the individual productivity leads to the instability and indeterminacy of a given stationary state. Second, sufficient heterogeneity leads to the global saddle-path stability and uniqueness of a given stationary state and the uniqueness of equilibrium.