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Religion and Economic Growth across Countries

Robert J. Barro and Rachel M. McCleary

Presented by

Erita Narhetali and

Luke Emeka Okafor

Development Economics, Warsaw UniversityOctober 2007

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Outline

• INTRODUCTION• THEORIES: ECONOMIC DEVELOPMENT

VERSUS RELIGION• DATA• CROSS COUNTRY FINDINGS• EXTENSIONS: AUTHOR’S PERSPECTIVE• APPRAISAL OF THE STUDY• CONCLUSIONS

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INTRODUCTION

• Motivations of the study:– previous studies neglect the influence of culture– need for incorporation of social and political variables

then....

• They investigated the effects of church attendance and religious beliefs on economic growth

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The Instrumental Variables are:- the presence of state religion- regulation of the religion market- the composition of religious adherence- An indicator of religious pluralism

INTRODUCTION....(Cont’d)

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THEORIES: ECONOMIC DEVELOPMENT VERSUS RELIGION

• Secularization hypothesis• Market or supply side forces hypothesis

– greater state regulation of religion may decrease the efficiency of religion providers

– stimulates religious activities– subsidy suppression (opposite!!)

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DATA

• Data sources– Penn World Tables

– World Development Indicators of the World Bank

– International data on education

• Others....– World Values Survey (WVS),

– International Social Survey Programme (ISSP),

– Gallup Millennium Survey (GMS)

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• The panel system estimations yields a set of partial correlations between the measures of religiosity and selected economic variables

• Applied the use of SUR approach in the estimation

CROSS COUNTRY FINDINGS

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Result...?!?

For given religous belief, increases in church attendance tend to growth

For given levels of church attendance, belief in hell, heaven, and an afterlife tend to growth

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Result...?!?

For given religous belief, increases in church attendance tend to growth

For given levels of church attendance, belief in hell, heaven, and an afterlife tend to growth

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EXTENSIONS OF THE STUDY: Author’s Perspectives

• The relationship between religious beliefs and individual behaviours or values

• The influence of church attendance on religious beliefs

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Our Appraisal.....

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Problems on basic assumption

RELIGION personal traits i.e. honesty, ethics, openness to stranger

CULTURE

Economic outcomes!?!

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Problems on methodology

• UNCLEAR relationship between:– Religiousity and Personal Traits; they are not

always correlated!

– Religious-driven Personal Traits and productivity

• Previous work by Weber (1904) +++• Some cases: Islam in Indonesia and CPI index ---

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• The notion of hell is not same for some world religions

• Productive workforce is a product of many factors– job security and satisfaction– wages and salaries – Education– Training– well-being– security, surveillance and binding contracts etc

Problems on methodology...(cont’d)

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• The religious variables DO NOT explain human motivation in decision making process, i.e.:- Religious-driven consumption behaviour, - insurances, - banking system, - business network, etc

Problems on methodology...(cont’d)

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Problems on Econometrics

• Sample selection bias (????)

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Problems on Econometrics...(cont’d)

• The exogeneity of the instrumental variables to economic variables raises some doubts– subsidies

– favourable tax policy

– religious bodies do not pay tax in some countries

– the difference between the state and the religious authorities in some countries are unclear

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Some interesting stuffs to discuss...

FEAR OF HELL MIGHT FIRE UP THE ECONOMY?

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A FAITHFUL WORLD, BELIEVE IT OR NOT

Gallup International Millennium Survey

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A FAITHFUL WORLD, BELIEVE IT OR NOT (cont’d)

ATTEND RELIGIOUS SERVICES REGULARLY(More than once a week+Once a week)

Gallup International Millennium Survey

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Some recommendations

• Examine the relationship between religious values and decision making process, especially in economic related activities!

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Conclusions

• Religion on average is a two-edged sword

– contributes towards moral sound society in some sense

– contributes towards economic backwardness if handled improperly

• Religious beliefs may influence individuals to behave morally

• The link between religious beliefs and productive work attitudes is uncertain and need further investigation.

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Thank you.....