Religion and Economic Growth
across Countries
Robert J. Barro and Rachel M. McCleary
Presented by
Erita Narhetali
and
Luke Emeka Okafor
Development Economics, Warsaw University
October 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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INTRODUCTION....(Cont’d)
The Instrumental Variables are:
-
the presence of state religion
regulation of the religion market
the composition of religious adherence
An indicator of religious pluralism
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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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CROSS COUNTRY FINDINGS
• 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
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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!?!
12
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 --13
Problems on methodology...(cont’d)
• 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
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Problems on methodology...(cont’d)
• The religious variables DO NOT explain
human motivation in decision making
process, i.e.:
-
Religious-driven consumption behaviour,
insurances,
banking system,
business network, etc
15
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.....
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