An Institutional Perspective on Religious Freedom and Economic Growth

The increase in religion-related conflicts around the world emphasizes the urgent need for a better understanding of the role of religion and religious freedom on socio-economic development, both theoretically and empirically. While studies on the role of religion on economic development have existed as early as Weber (1905), there is a dearth of studies on the effect of religious freedom on economic growth, and the existing studies overlook possible negative impacts on economies by unrestricted religious freedom. Drawing on institutional theory, we propose that different types of religious restrictions can exert either positive or negative effects on economic growth. We test our propositions using a comprehensive dataset on religious freedom covering 198 countries for seven years from 2007 to 2013.