Religion and economic development

Historically, plethora of researchers has investigated the role of religion across multiple facets of human existence. Research in the field of religion and economic development is in its initial stage, and now many researchers are concerned about the non-economic factors and their role in the development of an economy. Religion is considered as the most important non-economic factor that construct the basic institutional infrastructure of a society. The role of religion is reflected in many aspects of human life i.e. personal as well as professional. Scholars have been examining the impact of religion on economic growth such as Weber Max, Robert Baro, Rachel McCleary etc. to mention few. All the previous studies have tried to examine the impact of religiosity on economic growth directly, but next to none has tried to examine the indirect relationship of religion and economic development via different channels. This study is thus aimed at exploring the indirect channels through which religion can influence economic growth such as ethics, poverty alleviation, political participation, social capital and mental health. This research also intends to investigate how religion can contribute to eliminate conflict that arises due to fractionalization (ethnic, religious and linguistic), polarization (ethnic and religious), ethnic and religious tensions etc. In addition, the association between religiosity and economic development at continental level is examined coupled with an effort to know the role of religion in the economic growth of developed and developing countries. In this study religion has a positive direct effect on economic development and it is very significant. No strong evidence is found for the channels i.e. ethics, poverty alleviation, political participation, social capital and mental health through which religion mediates its effect on economic growth. Religion do mediate its effect through poverty, political participation and mental health, but it is not significant. It is hard to find any evidence that shows mediation effect of religion through ethics, and social capital. In case of fractionalization (ethnic, religious and linguistic), polarization (ethnic and religious), ethnic and religious tensions, they all have negative impact on economic growth. When their respective interaction terms with church attendance is included in the equation, all the coefficients of interaction term turnout to be positive except religious polarization, and these results are not significant. In economic development, religion also plays its role in various regions particularly in Asia and Europe where its impact is positive and is highly significant; Africa shows somewhat positive but insignificant results and in case of American region, the linkage of religion and economic development is not robust. Developing countries show the positive impact of religion on economic development but these results are not robust. In developed countries effect of religiosity on economic development is positive and it is robust as well.