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Religion and Economic Growth across Countries

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. Outline. INTRODUCTION THEORIES: ECONOMIC DEVELOPMENT VERSUS RELIGION DATA

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Religion and Economic Growth across Countries

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  1. Religion and Economic Growth across Countries Robert J. Barro and Rachel M. McClearyPresented byErita Narhetaliand Luke Emeka Okafor Development Economics, Warsaw UniversityOctober 2007

  2. Outline • INTRODUCTION • THEORIES: ECONOMIC DEVELOPMENT VERSUS RELIGION • DATA • CROSS COUNTRY FINDINGS • EXTENSIONS: AUTHOR’S PERSPECTIVE • APPRAISAL OF THE STUDY • CONCLUSIONS

  3. 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

  4. 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

  5. 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!!)

  6. 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)

  7. 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

  8. 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

  9. 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

  10. 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

  11. Our Appraisal.....

  12. Problems on basic assumption RELIGION personal traits i.e. honesty, ethics, openness to stranger CULTURE Economic outcomes!?!

  13. 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 ---

  14. 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

  15. 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

  16. Problems on Econometrics • Sample selection bias (????)

  17. 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

  18. Some interesting stuffs to discuss... FEAR OF HELL MIGHT FIRE UP THE ECONOMY?

  19. A FAITHFUL WORLD, BELIEVE IT OR NOT Gallup International Millennium Survey

  20. 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

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

  22. 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.

  23. Thank you.....

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