The link between economic and religious freedoms

Freedom of belief is one of three factors significantly associated with global economic growth, according to a recent study by researchers at Georgetown University and Brigham Young University. The study looked at the GDP growth of 173 countries in 2011 and controlled for two-dozen different financial, social and regulatory influences.

While a study such as this does not prove that religious freedom causes economic growth, it does suggest the matter deserves more consideration.

Indeed, as the world navigates away from years of poor economic performance, freedom of religion or belief may be an unrecognized asset. For instance, the same study finds a positive relationship between religious freedom and 10 of the 12 pillars of global competitiveness, as measured by the World Economic Forum’s Global Competitiveness Index. (See the chart, which shows innovative strength to be more than twice as likely in countries with low religious restrictions and hostilities.)

Research indicates that when freedom of religion or belief is put to practice, it has the following effects:

• Reduced corruption: Research finds that laws and practices that exclude religion are related to higher levels of corruption. This is borne out by a simple comparison between the Pew Research Center’s 2012 Government Restrictions on Religion Index and the 2014 Corruption Perceptions Index. Nine of the 10 most corrupt countries have high or very high governmental restrictions on religious liberty. This includes North Korea, which Pew does not have enough data to rate but considers one of the most religiously restrictive countries. Religious freedom allows businesspeople to draw on spiritual values and moral teachings as they go about their work; it helps to inform business ethics.
• More peace: When religious freedoms are not respected, the result can be violence and conflict. Normal economic activities become vulnerable to disruption, with local and foreign investment driven away and sustainable development undermined. One need only look at Egypt, where religious regulations and hostilities have adversely affected the tourism industry. More generally, tolerance is a key ingredient in peace and stability, which is particularly important for business because, where stability exists, there is more opportunity to invest and conduct normal and predictable business operations, especially in new and emerging markets. This is the topic of the 2011 Cambridge University Press book The Price of Freedom Denied and a 2014 study by the Institute for Economics and Peace.
• Less harmful regulation: Some religious restrictions can directly affect economic activity, creating legal barriers for import and export industries, such as the halal food market. Proscriptive laws can also stoke region-wide religious hostilities, again disrupting markets. Examples range from discrimination against women in the workplace (over such things as headscarves) to the use of anti-blasphemy laws to attack business rivals, such as recently happened in the media industry.
• Reduced liabilities: Stocks of Abercrombie & Fitch dropped when news broke that the clothing retailer had allegedly refused to hire a Muslim woman wearing a headscarf, potentially a violation of American equal opportunity employment laws. By avoiding religious discrimination in the workplace, businesses can avoid such liabilities.
• More diversity and growth: Freedom of religion can contribute to a rich pluralism that is itself associated with economic growth. For instance, the world’s 12 most religiously diverse countries each outpaced the world’s economic growth between 2008 and 2012, according to recent research. Indeed, the active participation of religious minorities in society often boosts economic innovation, as the history of the Industrial Revolution has shown. In China, during the Cultural Revolution of the 1960s and 70s, religion was outlawed and many people were persecuted for their beliefs. While it is true that China continues to regulate religion more strictly than other countries, current conditions are far freer. This relative opening-up of society has resulted in the spread of religion, such that China is now home to the world’s second-largest religious population after India, according to the latest demographic estimates. A new study in the China Economic Review finds a link between Christianity, adhered to by some 5% of China’s population, and the nation’s economic growth. Furthermore, a study led in part by Professor Ram Cnaan, of the University of Pennsylvania, finds that a wide diversity of religious congregations in a city contributes many millions of dollars to the economy through direct spending and activities ranging from educational and health services to a network of relationships that helps provide jobs and a safety net for those facing hard times.

Arguably, ensuring freedom for religious groups in China and elsewhere is a way to stimulate and sustain growth in the decades ahead. It’s something every country can benefit from.

Author: Brian J Grim is the president of Religious Freedom & Business Foundation and a member of the World Economic Forum’s Global Agenda Council on the Role of Faith.

Image: The twin minaretes of a mosque are seen with office towers along Sheikh Zayed Road in Dubai, November 29, 2009. REUTERS/Steve Crisp