Religious Freedom, Interference in Religion, and Economic Growth: An Empirical Examination Across Countriesby Ilan Alon, Shaomin Li and Jun Wu

Rev. Albert P. Marcello, IIICapita Selecta II - Society, Law and Religion

1. Introduction

• Questions of religion pose issues for scholars of the economyo Religious freedom is seen as something desirableo Democracy and religious freedom are closely related

• Is religious freedom also something which is necessary for a healthy economy?

• What about the need for governmental restrictions on religious manifestations?o How do these questions relate to positive economic

growth?

2. How Religion Affects the Economyo Max Weber: The Protestant Ethic and the Spirit of Capitalism

• Certain religious traditions are more favorable toward economic growth• Protestant emphasis on thriftiness, religious liberty, bourgeoisie• Confucian emphasis on similar traits in the East• Studies cited supporting the position of Christianity in aiding growth

o Social Capital• The communitarian aspects of religion enrich social capital through networking• Religious institutions promote civic values and social service

o Comprehensive approach• All religions focus on the hereafter and developing a moral code

• Accountability to a higher power• Contributes to a just society

• This approach may perceive time devoted to religious activities as time poorly spent economically• Islamic economic policies are cumbersome to an economy

• If religion is seen as positive, religious freedom will encourage economic development

o If negative, government limitations curtailing religion will stimulate economic growth

3. Why/How Does FORB Affect Economic Prosperity?

o Institutional Perspective• FORB is part and parcel of a democratic society

• Related to other freedoms: assembly, press, etc.

• FORB can be divided into:• Formal mechanisms

- Government policies- Laws

• Informal mechanisms- Social attitudes or trends

• The two may clash

• Institutionally similar models are likely to be trade partners

o US investment motivates religious freedom• 1998 International Religious Freedom Act

• US can impose sanctions on countries that persecute on the basis of religion

• US provides most foreign aid & is world’s largest investor

3. Why/How Does FORB Affect Economic Prosperity? (Continued)

o Competition among religions increases the market for religious services• Diversity brings competition and development

• However, in countries with weak institutions, conflict can arise

• Economic drain when persecuted Jews left USSR• Puritans leaving for the Colonies

o Research demonstrates that religious freedom promotes the economy• Freedom and the “invisible hand” go together• Persecution causes economic drain

o Religious freedom has various dimensions that need to be accounted for

4. Two-Sided Effects of FORB• Positive Effects

• Produced by healthy religious traits of thrift, social capital, etc.

• Negative Effects• Too-frequent religious activities or those that cause violent conflict

• Definition of FORB• “Any increase in the cost of believing, practicing and acting on one’s faith

decreases religious freedom. Conversely, anything that decreases those costs increases religious freedom.”

• UN Int’l Covenant Definition

• Religious freedom may impact another’s religious freedom and cause conflict• Gov’t regulations may be necessary for social/economic order

• Institutional Dimensions of FORB• “Soft” rules/Religious culture• “Hard” rules/Government regulations

5. Measures of Freedom

• Freedoms measured by the degree of restrictiono Social Hostilities Involving Religion (SHI)

• Negative attitudes toward other religions; opposed to tolerance• Fuels conflict• Increases cost of religious activities• Decreases FORB

• Ultimately, slower growth

o Government Restrictions on Religion (GHI)• Unregulated freedom may lead to “a war of all against all”• “Necessary to protect public safety, order, health, or morals or

the fundamental rights and freedoms of others” (United Nations)• May have a positive impact

5. Empirical Findings

• Dependent Variableso GDP Growth Rateo Per-Capita GDP Growth Rate

• SHI and GRI valueso Taken from Pew Research Center 2012o Scale of 0-10 (least to most social restrictions &

government hostilities)o GRI based on survey values on 26 questions about

government attitudes toward religion

5. Empirical Findings (Continued)• Positively correlated with economic growth• Government regulations are necessary to maintain rules

governing the religion market – or at least stem hostilities• Government limitations on religious freedom exerts a positive

effect on economic growth, whereas government discrimination against certain religion(s), plays a negative role in economic growth.

• Government discrimination reduces freedom and increases costs of practicing that religion = lower economic growth• Higher GL and lower GD encourage growth

• Do GRI & SHI interact?• No significant impact upon growth

5. Empirical Findings (Continued)o RDI (Religious Diversity Index)

• Positively associated with high economic growth• Diversity leads to competition and different thought

- Ex.: Silicon Valley, California

• RDI & SHI• Can reduce negative effect of SHI

• RDI & GRI• Interaction good for growth• Diversity should exist but government should restrain tensions

• Highest diversity in Asia

5. Empirical Findings (Continued)o Religion50

• Dummy variable for dominant religion in a country• = 1 for dominant religion

• Christian or Muslim dominance implies negative correlation with economic growth

• Hindu neutral• Buddhist positive!

• More fragmented religion in practice, not as organized

• If a single religion dominates, economic growth suffers.

o EDU index = human capitalo Economic Freedom Index

• Wall Street Journal/Heritage Foundation

6. Conclusionso Government limitations help economic growth by limiting

conflicts• Regulated free religious market

o Lack of protection for FORB and discrimination hamper growth

o Religious diversity is healthy socially and economicallyo Governments should protect FORB and treat all

religions equally• Freedoms should be properly restrained to minimize conflict• High level of social tolerance also desirable socially and

economically