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Religion and economic development: new insights

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Abstract

Historically, plethora of researchers has investigated the role of religion across multiple facets of human existence. Research in the field of religion and economic development is in its initial stage, and now many researchers are concerned about the non-economic factors and their role in the development of an economy. Religion is considered as the most important non-economic factor that constructs the basic institutional infrastructure of a society. This study is thus aimed at exploring the indirect channels through which religion can influence economic growth such as ethics, poverty alleviation, political participation, social capital and mental health. This research also intends to investigate, the association between religiosity and economic development at continental level coupled with an effort to know the role of religion in the economic growth of developed and developing countries using cross sectional data of 110 countries. Due to endogeneity problem in religion and other variables, this study uses system generalized method of moment to estimate the relationship between religion and economic development. The results report that religion has a positive and statistically significant direct effect on economic development and shadow economy. Channels i.e. ethics, poverty alleviation, political participation, social capital and mental health reduce significantly the size of religiosity coefficient and makes it less significant that indicates these channels mediate the impact of religion on economic development and shadow economy. Although the individual impact of each channel on economic growth and shadow economy is not significant. In Asia and Europe impact of religion is positive and is highly significant; Africa shows somewhat positive but insignificant results and in case of American region, the linkage of religion and economic development is not robust. Developing countries show the positive impact of religion on economic development but these results are not robust. In developed countries effect of religiosity on economic development is positive and it is robust as well.

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Authors and Affiliations

  1. Pakistan Institute of Development Economics, Islamabad, Pakistan

    Unbreen Qayyum

  2. The University of Lahore, Islamabaad, Pakistan

    Sohail Anjum

  3. Kashmir Institute of Economics, University of Azad Jammu & Kashmir, Muzaffarabad, Pakistan

    Samina Sabir

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  1. Unbreen Qayyum
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  2. Sohail Anjum
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Appendix

Appendix

See Tables 10, 11, 12, Figs. 1, 2, 3, 4, 5, 6, 7 and 8.

Table 10 Operationalization of conceptual frameworks.
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Table 11 List of countries.
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Table 12 Descriptive statistics: mediators and control variables.
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Fig. 1
figure 1

Source: Calculated based on World Value Survey (2014), European Value Study (2008), World Development Indicators (2014) and Medina and Schneider (2018)

Religiosity, shadow economy and economic growth.

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Fig. 2
figure 2

Source: Calculated based on World Value Survey (2014), European Value Study (2008), World Development Indicators (2014), Medina and Schneider (2018)

Social capital, religion, shadow economy and economic growth.

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Fig. 3
figure 3

Source: Calculated based on World Value Survey (2014), European Value Study (2008), World Development Indicators (2014) and Medina and Schneider (2018)

Poverty, religion and economic growth

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Fig. 4
figure 4

Source: Calculated based on World Value Survey (2014), European Value Study (2008), International Institute for Democracy and Electoral Assistance (2014), Medina and Schneider (2018) and World Development Indicators (2014)

Political participation, religion, shadow economy and economic growth.

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Fig. 5
figure 5

Source: Calculated based on World Value Survey (2014), European Value Study (2008) and World Development Indicators (2014)

Mental health and religion.

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Fig. 6
figure 6

Source: Calculated based on World Value Survey (2014), European Value Study (2008), Medina and Schneider (2018) World Development Indicators (2014)

Mental health, shadow economy and economic growth.

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Fig. 7
figure 7

Source: Calculated based on World Value Survey (2014), European Value Study (2008), Medina and Schneider (2018) and World Development Indicators (2014)

Ethics and religion.

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Fig. 8
figure 8

Source: Author (2016) calculated based on World Value Survey (2014), European Value Study (2008), Medina and Schneider (2018) and World Development Indicators (2014)

Ethics, shadow economy and economic growth.

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Qayyum, U., Anjum, S. & Sabir, S. Religion and economic development: new insights. Empirica 47, 793–834 (2020). https://doi.org/10.1007/s10663-019-09456-3

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