WASHINGTON — Religious freedom, at first glance, may not seem a key predictor of economic growth. But a new study released this week argues that the more religious freedom a nation has, the better its financial system can perform.
"Religious hostilities and restrictions create climates that can drive away local and foreign investment, undermine sustainable development, and disrupt huge sectors of economies," the Religious Freedom & Business Foundation stated in announcing the findings.
Those conditions, in turn, stifle economic growth, the group says, noting "the ongoing cycle of religious regulation and hostilities" in Egypt following the 2011 overthrow of Hosni Mubarak that has "adversely effected (its) tourism industry and other sectors."
"Perhaps most significant for future economic growth, the study notes that young entrepreneurs are pushed to take their talents elsewhere due to the instability associated with high and rising religious restrictions and hostilities," the RFBF said.
Growing global concerns
The new study, "Is Religious Freedom Good for Business?: A Conceptual and Empirical Analysis," is authored by three scholars in the field: Brian J. Grim, RBRF founder and president, who also is affiliated with Georgetown University's Berkley Center for Religion, Peace & World Affairs; and Greg Clark and Robert Edward Snyder, of Brigham Young University's International Center for Law and Religion Studies. Clark is vice president of the RFBF.
The study appears in the Interdisciplinary Journal of Research on Religion, and is available online.
One measure of economic progress was growth of a country's Gross Domestic Product, or GDP.
According to the RFBF, the study looked at GDP growth for 173 countries in 2011 and found religious freedom correlated with lower corruption. Moreover, "when religious groups operate in a free and competitive environment, religion can play a measurable role in the human and social development of countries."
The authors analyzed 2011 GDP data and compared with data on religious restrictions, the level of economic and business freedom in a given country, and "measures of government regulation, taxes, labor issues, demographics and economic circumstances."
The result: "Religious freedom … is one of only three variables that remains a significant predictor of GDP growth," the report indicated.
In concluding the study, the authors recommend businesses "take religious freedom considerations into account in their strategic planning, labor management, and community interactions."
The authors also advise business leaders: "In evaluating locations for future research and development operations, countries with good records on religious freedom may provide a favorable environment in which to practice innovation and experimentation."
Religious freedom has been a complicated issue in many societies ranging from death sentences imposed by draconian blasphemy laws in the Middle East and Africa to more subtle restrictions through local zoning regulations, marriage and health care laws in the United States. Most religious liberty supporters have advocated from a perspective of individual rights to religious exercise and expression. Now, Grim and other scholars are at the forefront of an emerging movement that is making a case for religious freedom through its financial benefits.
Katrina Lantos Swett, an advocate for religious liberty and current vice-chair of the U.S. Commission on International Religious Freedom, welcomed the RFBF study that highlights how religious hostility can drive away outside investment and undermine economic growth.
"This study also reinforces the growing recognition that religious freedom is not only a central factor in global economic growth but also contributes to peace and stability," she said. "As such, religious freedom merits a seat at the table of U.S. foreign policy."
'Clear' correlation
Sociology professor Roger Finke of Penn State University, who had worked with Grim on previous examinations of the topic, said a link between data measuring religious freedom and economic growth "is very real" and quantifiable.
"The correlation — that's very clear. The association is definitely there," Finke said in a telephone interview. However, he added, "the part they're always struggling to figure out is to what extent the religious freedoms or culture has an impact on economics."
According to the RFBF, the new study "goes beyond simple correlations by empirically testing and finding the tandem effects of government restrictions on religion and social hostilities involving religion (as measured by the Pew Research Center) to be detrimental to economic growth while controlling for 23 other theoretical, economic, political, social, and demographic factors."
Other scholars have also pointed out similar connections, Finke noted. Duke University economics and political science professor Timur Kuran argued in his 2010 book, "The Long Divergence: How Islamic Law Held Back the Middle East," that "starting around the tenth century, Islamic legal institutions, which had benefitted the Middle Eastern economy in the early centuries of Islam, began to act as a drag on development by slowing or blocking the emergence of central features of modern economic life."
Islamic restrictions on those "central features" — which Kuran listed as "private capital accumulation, corporations, large-scale production and impersonal exchange" of goods and services — began to be eased about 800 years later, as Islamic societies had more interaction with global trade, he noted, but the drag on economic development in many Muslim countries remains.
Apart from having more open societies, a lingering question is how else can nations improve their economies through protecting religious freedom? To sociologist Finke, one answer lies in an independent judiciary.
He said, "The majority of countries promise religious freedom. But they all have laws that counter that, or administrators that go against (it). There are sometimes even dueling clauses in constitutions concerning religious liberty. The importance of an independent judiciary is that it enforces the promised freedoms of a (country's) constitution."
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