L’Observatoire des religions

Religion and International Trade

Estimating the Institutional and Network Effect of religious Cultures on International Trade,

samedi 3 mai 2008 par Joshua J. Lewer and Hendrik Van den Berg

Economists have increasingly emphasized the rôle of institutions in shaping économic activity. Among the many studies on institutions, however, there has been relatively little resarch on the économic rôle of religion in modefrn societies or in recent episodes of économic growth and change. This lack of research is suprising because religious practices, traditions, and philosophies are important components of national cultures that shape institutions. Religious cultures are clearly legitimate subjects for scientific study. This paper contributes to the research on the économic impact of religious cultures and religious institutions by examining the empirical relationship between religious cultures and international trade.
Religion can impact international tarde in several ways. First, religion is a cultural institution that directly guides human behavior. For example, if a religious culture encourages production, hard work, and commercial activity, [...]it is likely to also encourage international trade. On the other and, many religious cultures discourage the short-term « pursuit of happiness » , and this could suppress people’s desire to engage in short-term welfare-enhancing économic transactions. Tje relative strengths of religion’s positive and negative institutional effects on international trade differ from one religious culture to another because each provides somewhat different incentives for human behavior.
Second, the sharing of particular religious cultures by people in different countries may enhance trust and, therefore, effectively create networks that facilitatecomplex international économic transactions when other other supportive gouvernement and social institutions are missing (Rauch, 1999, 2001), Barabasi (2002), and Rauch and Castela (2003), examine the économic rôle of networks. For example, Greif (1989, 1993), describes how the Maghribi traders, a small ethno-religious group dispersed throughout the politically fragmented Mediterranean region in the Middle Ages, established a long-distance trade network. Ensminger (1997) similarly discusses how Islamic merchants created trade networks in the Mediterranean region and North Africa more than 1,000 years ago. Adam Smith (1776) anticipared today’s literature on networks when he described how the strict social organization of religious sects provided a behavioral gurantee that could substitute for formal gouvernement institutions to enforce contarcts. Fafchamps’ (2003) recent study on Africa finds that the sharing of religious cultures still enhances trust and enables trade.
Trade network do not necessarily maximaize trade, however. Networks are by nature exclusive, and they can divert tarde as welle as create trade. Networks baseed on the sharing of religious culture may discriminataagainst « non-believers » and divert trade away from partner with the highest potential mutual welfare gains. Greif (1994) argues that improvment in non-religious institutions during the Renaissance expanded trade to a more diverse set of traders than was possible with the eralier ethnic networks. Freund and Weinhold (2000) find that the Internnet had little effect on international trade befoe 1995 when [...] was somewhat exclusivee , but after 1997, when it became more inclusive, [...] ha da significantly positive effect on trade volume.
Finally, religious cultures indirectly affect commerce and trade through their influence on sociéties’ other institutions such as social traditions, customs, laws, gouvernement and other organizations. For many of the same reasons that the direct influene religious culture may, or may not, make a country’s gouvernement, law, regulations, social costums, and traditions supportive of international trade. In summary, theory and evidence give us ambiguous picture of how religious culture in general [...] is likely to affect international trade
