The holiday season is a time when people all over the world reflect on the role of religion in their lives. But how does religion, and especially religious diversity, affect our economies?
I decided to take a look using data from the Pew Research Center’s Religion & Public Life Project on “global religious diversity.” The Pew data track the level of religious diversity, measured as the percentage of the population that belongs to eight major religious groups in countries around the world. These include the five major world religions—Buddhism, Christianity, Hinduism, Islam, and Judaism—which account for about three-quarters of the world’s population, as well folk or traditional religions, the religiously unaffiliated (atheists, agnostics, etc.), and other religious groups (Baha’i, Sikhism, Taoism, etc.). The study ranked countries on a 1 to 10 scale based on their having a more equal share of these religious groups.
The map above, from the report, shows the pattern of religious diversity worldwide. There are some surprises here. Though the countries with the least religious diversity are obviously the least secular—Vatican City, Afghanistan, and Iran are all near the bottom of the list—religious diversity or pluralism clearly does not result in secular values. Six of the twelve countries that scored very highly on their diversity ranking are in the Asia-Pacific region: Singapore, Taiwan, Vietnam, South Korea, China, and Hong Kong. Five more are in sub-Saharan Africa—Guinea-Bissau, Togo, the Ivory Coast, Benin, and Mozambique. South America’s Suriname rounds out the top dozen.
With the help of my Martin Prosperity Institute (MPI) colleague Charlotta Mellander, I dug a little deeper into the ways that religious diversity might be associated with economic performance. As usual, I note that correlation does not imply causation, and ultimately one would want to control for the effects of religious diversity alongside other variables in multivariate analysis. Still, five key findings jump out from this analysis.
- First and foremost, religious diversity is associated with the overall productivity and economic competitiveness of nations. Religious diversity is positively associated with total factor productivity (.32) based on World Bank measures and overall economic competitiveness (.56) as ranked by the World Economic Forum. It is also associated with higher levels of entrepreneurship (.37) based on the Global Entrepreneurship Monitorrankings.
- Pluralism is also associated with more urbanized societies, with a positive correlation to national levels of urbanization (.31).
- Religious diversity tracks key markers of social tolerance. It is positively correlated to the Gallup survey responses on the acceptance of racial and ethnic minorities (.45) and the acceptance of gays and lesbians (.31). There is an even stronger relationship between religious diversity and the treatment of women based on the UN’s Gender Inequality Index, where more gender equal nations also have more religious diversity (.55).
- Pluralism is tied up with the broad shift to a post-industrial knowledge-based economy, as it is positively correlated with share of workers in the creative class (.42).
- Finally, pluralism is associated with the overall the happiness and well-being of nations. It is positively correlated with Gallup’s overall measure of life satisfaction (with a correlation of.32) and even more so with the United Nations’ assessment of overall human development (.38).
Many pundits and social scientists continue to discount the economic role of diversity, turning instead to more standard economic variables like technology and education. Those things clearly matter, but the diversity and openness of a society do as well. Our analysis finds that diversity is associated with economic competitiveness, entrepreneurship, and key measures of talent and human capital.
Of course, this relationship likely goes both ways, as higher levels of economic development and human capital are likely to be associated with greater tolerance and diversity. That said, openness to diversity is also likely to help prompt economic development by encouraging innovation and enabling societies to better attract and tap into a wide range of talent across lines of gender, ethnicity, nationality, and religion.
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