Religious Freedom Promotes Economic Development

This week we’re asking our associated economics scholars to examine the relationship between religious freedom and economic development. Specifically, we ask if religious repression is linked to underdevelopment and poverty. Respondents also explore the opposite phenomenon, namely, if robust religious freedom leads to economic flourishing and prosperity.

By: Timur Kuran

Economic development is driven by new ideas and risk taking. A disproportionate share of the innovations and entrepreneurship that raises living standards occurs in cities because urban environments offer particularly great opportunities for expressing new ideas freely, challenging established ways of doing things, and experimenting. By the same logic, restrictions on producing, sharing, or executing ideas can limit economic development. Religious restrictions can hold back economic development by constraining what can be discussed, by narrowing the social spaces in which new ideas can be shared, by limiting communication among social groups, and by ruling out certain ideas merely because of their religious associations. 

For decades, Turkey’s secular governments limited entrepreneurship outside of Istanbul and Ankara through policies that diminished the resources going to the businesses of devout Muslims. With the softening in the 1990s of these implicitly anti-Muslim policies, entrepreneurship received a massive boost and the country was transformed into an industrial country and one of the world’s top six tourist destinations. Releasing the resources, talents, and energies of devout Turks has played an important role in this rapid transformation. 

Restrictions on religious freedoms do not come only from secularists seeking protection from religion. They come also, and more significantly, from religious leaders opposed to ideas that conflict with their own sense of truth. Such leaders reduce their religion’s capacity to address economic challenges successfully by impoverishing discourse within their own religious community and also by limiting intellectual exchanges across belief communities. Their intolerance of dissent and disrespect for others’ religious freedoms also foster a climate of mistrust and fear among the general public.

Pakistan offers a sad example of a country that has harmed its economic development through cascading religious restrictions imposed in the name of religion. In stages since the 1940s, Pakistani Islamists have narrowed the definition of a good Muslim, stigmatized Muslims who interpret Islam differently, declared certain strands of Islam heretical, and on an expanding range of matters effectively denied non-Muslims the right to voice opinions. In the process, they have kept Islamic discourses from breaking out of medieval molds. They have limited the contributions that they and their followers could make to debates on economic matters. They have also narrowed Pakistani public discourse in general by making Pakistanis of all stripes reluctant to make observations or express opinions that might offend Islamic sensibilities. 

All that said, religious freedom does not automatically promote economic freedom, dynamism, development, and prosperity. The results depend partly on the unleashed political agendas. As essentially secular regimes allowed Islamists more political rights, some of the ideas that the latter promoted in the name of Islam did economic harm. As a case in point, in the 1970s Islamists in Egypt, Pakistan, and Libya, among other places, promoted the idea of “Islamic socialism,” which contributed to keeping Muslims wedded to economically inefficient state policies. During its year in power (2012-13), Egypt’s Muslim Brotherhood resisted calls to reduce inefficient food and fuel subsidies, mainly on the ground that this would be unfair from an Islamic viewpoint. 

Nevertheless, religious freedom generally promotes economic advancement by boosting other freedoms that are essential to economic development. Where religious freedoms are respected, people find it more natural to respect political, artistic, and social freedoms. Experiments in which subjects are made to play multiple games show that even when they are free to apply distinct strategies to each game, they often behave identically. For example, when playing a competitive auction game paired with or followed directly by a public goods game, cooperation is less common in the public goods game than when it is played alone. As it turns out, strategies used in one game bleed into those used in others. Evidently framing and learning transfer effects lead to common behavioral patterns across contexts. This is a basic reason why international freedom rankings are highly correlated across contexts. Countries with high religious freedoms have high political freedoms, and vice versa. 

In sum, religious freedom advances economic development by making people comfortable with diversity of opinion, the expression of new ideas, and challenges to vested interests. 

Timur Kuran is professor of Economics and Political Science and Gorter Family Professor in Islamic Studies at Duke University, as well as an associate scholar with the Religious Freedom Project. 

This piece was originally authored on April 28, 2014 for the Religious Freedom Project at Georgetown’s Berkley Center for Religion, Peace, and World Affairs.