The Impact of Religion on Economic Development

Abstract

The role of religion in the development of law and order, in the progress of the government institutions and ultimately the state of economy has long occupied the minds of political economists. The obvious difficulty of this topic stems from the inability to stage and execute the controlled experiments, and the complexities of discovering the counterfactual evidence that would not be confounded by latent variables. In this paper we explore the novel approach to this problem that uses structural learning algorithms capable of finding the best-fit distributions for factors linking religion to major traits of the governance and economy. We find that the importance of religion in the society is conditionally independent from the economy given state institutions (rule of law and business regulations). This means a society with strong institutions can possibly develop a strong economy with no regard to religious beliefs.