1 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

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 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)

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 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

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 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)

15 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)

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.....