Religious Freedom and Economic Prosperity: Pakistan’s Double-Edged Sword–Part 1

This is Part 1 of a 2-part series. Click here to read Part 2.

By John Cosenza

I: Introduction

The 18th century Enlightenment ushered in new socio-economic, religious and political ideologies focused on the individual rather than the collective. Enlightenment economists, such as Adam Smith, and political thinkers, such as John Stuart Mill, not only advocated for the advancement of individualism in economic and political life but argued that the ability to pursue one’s interests is beneficial to society at large.[1] The cornerstone of this philosophy, and that of western civilization, rests on the notion that individual freedom promotes a stable society conducive to social and economic advancement. The results of this philosophy are most noticeable in societies that allow individuals to exercise their religious freedom. Indeed, contemporary intellectuals advance the same philosophical beliefs introduced by revolutionary thinkers during the Enlightenment, especially regarding religious freedom. Ilan Alon and Gregory Chase’s quantitative study finds that “economic freedom has the highest correlation with per capita GDP, followed by civil liberties, religious freedom, and political freedom”[2] while researchers Greg Clark and Robert Edward Snyder articulate how “religious freedom contributes to better economic and business outcomes.”[3]

Despite the strong correlations between religious freedom, social stability, and economic growth, the world has witnessed a steady increase in religious restrictions and hostilities. According to the Pew Research Center, “74 percent of people today live with high levels of religious hostilities, violence, or conflict, a markedly higher percentage than just five years ago, when 45 percent of people lived with such levels.”[4] It is not the objective of this analysis to solely link religious freedom to a state’s economic advancement because, as noted above, other factors such as economic and political freedom, or the lack thereof, also contribute to the success of a nation’s economy. Rather, its intention is to discuss and promote the economic benefits associated with religious freedom. The following analysis contributes to ongoing discussions and literature linking religious freedom to economic growth by; 1) reviewing a brief historical analysis of nations that have economically prospered by allowing religious freedom, 2) discussing data-driven findings that conclude religious freedom to be a contributor to economic growth, and 3) assessing the economic consequences of Islamization in Pakistan, one of the world’s leading violators of religious freedom.

II: The Emergence of Religious Freedom in Northwest Europe

In Religious Liberty and Economic Prosperity: Four Lessons From the Past, Anthony Gill and John M. Owen IV suggest “nations that have developed strong legal guarantees of religious freedom (and a concomitant culture of religious toleration) are also ones that have had long-term sustained economic growth.”[5] According to Gill and Owen, this correlation first emerged in northwestern Europe during the 17th and 18th centuries—notably in the Netherlands and Great Britain (and, by extension, the British American colonies).[6] Gill and Owen lay out their findings by discussing specific lessons from this time period that can still be applied today.

The first lesson underlies the basic notion that religious freedom promotes diversity, security, and prosperity. Gill and Owen argue that the Dutch Republic witnessed the culmination of technological advancement, economic prosperity, and an increase in religious toleration during the late 16th century. Following a series of bloody religious-based conflicts, civil leaders recognized a level of religious tolerance would be required to avoid a perpetual state of war. Although true religious toleration took many decades to materialize in northwestern Europe, the Union of Utrecht in 1579 showed a legal commitment to religious toleration. The treaty included provisions declaring that each Dutch was province free to regulate religious matters as it saw fit, that there would be no official state-backed religion, and that persecution based on religious beliefs would be forbidden.[7] Moreover, “in contrast to the Anglican settlement in England, the Dutch state did not control the church and Dutch citizens were not required to join it.”[8] Following the Union of Utrecht, religious authorities in major cities like Holland allowed an increasing number of Lutherans, Arminians, Jews, Catholics, and other religious minorities to hold services and build their own houses of worship. Gill and Owen argue that “a symbiotic relationship took hold between city officials and religious minorities, with the benefits being realized in bustling trade.”[9] This mutual understanding, steeped in economic interest, enabled the dual emergence of religious toleration and economic growth. Religious minorities could now pursue professional careers as shopkeepers, teachers, artisans, merchants and bankers. The bustling society developed an attitude which allowed religiously diverse peoples to “interact with one another and capture the gains from trade, making the Netherlands one of the great commercial empires of the time.”[10]

As their analysis continues, Owen and Gill discuss another important lesson to be learned; religious freedom attracts entrepreneurs and industry as evidenced by the history of France’s relationship with religion.[11] France was plagued by religious-based conflicts following the Protestant Reformation, and the persecution of French Protestants led to substantial economic losses. In an attempt to stymie religiously-motivated conflicts, France’s King Henry IV enacted the Edict of Nantes in 1598, which allowed French Protestants “a tolerated freedom to practice their dissenting faith.”[12] However, only a century later, King Louis XIV revoked the Edict of Nantes causing another wave of anti-Protestant persecution. As one may expect, hundreds of thousands of wealthy, well-educated, and business-minded French Protestants fled to more religiously tolerant states including England and the Netherlands and “helped boost the economy” of their newly settled homes.[13]

This lesson was quickly learned and adopted by the English and, by extension, the founders of the American colonies who understood the importance of attracting migrants, especially entrepreneurs, through religious tolerance and freedom. William Penn specifically advertised Pennsylvania as a land of religious tolerance and attracted settlers from New England where Puritan society was less accepting of religious minorities. Furthermore, anti-Anglican persecution stemming from the English Civil War (1642-1651) led to a mass exodus of industrious English settlers to the religiously tolerant colony of Virginia. By the time of American independence, the Anglicans helped turn Virginia into the most prosperous colony in North America. Ultimately, Owen and Gill indicate that religious freedom attracts “migrants, particularly the risk-taking entrepreneurial types,” which, “are a necessary component of economic growth.”[14]

As religious freedom is under threat across the globe, history provides great lessons that should always be taken into consideration. Indeed, Owen and Gill conclude that “history also provides evidence that religious tolerance and freedom enhances social well-being in many other realms, including long-term economic growth and democratic governance.”[15]

III: Linking Religious Freedom to Economic Advancement

In Is Religious Freedom Good for Business?: A Conceptual and Empirical Analysis, authors Brian Grim, Greg Clark, and Robert Edward Snyder conduct a quantitative study and expand the religious economies theory by briefly articulating how the lack of religious freedom contributes to worse economic outcomes and how the presence of religious freedom contributes to better business and economic outcomes.”[16] Their study analyzes the relationship between indicators of global economic competitiveness and religious hostilities and restrictions. To assess this relationship, the authors “test the tandem effects of government restrictions on religious freedom and social hostilities involving religion on economic growth.”[17] Data sources including the World Economic Forum’s multi-component Global Competitiveness Index (GCI) and the Pew Research Center’s Government Restrictions Index are leveraged to determine the correlation between religious freedom, political stability, and economic prosperity. According to their findings, “the vast majority of indicators of global competitiveness – ten of twelve – are stronger in countries with low religious hostilities and low government restrictions on religious freedom.”[18]

Grim, Clark, and Snyder support this claim by discussing several examples in which religious institutions have a positive impact on a nation’s economy. For example, religious institutions are known to provide education and health services. Thus, “it is not surprising that health as well as primary, secondary, and technical education is stronger in countries with more religious freedom and less religious hostility. Environments with religious freedom allow religious groups to better provide educational and health services, which are often part of their core mission.”[19] Other pillars of global competitiveness, such as business sophistication, can also be witnessed in nations that promote religious freedom. In religiously tolerant environments, religious organizations are known to develop and execute innovative marketing campaigns to reach a diverse audience and attract followers. The authors argue “the service, publication, and outreach activities of religious groups provide large numbers of people with local and perhaps homegrown examples of sophisticated networking and growth strategies.”[20]

Similar to the authors previously discussed, Grim, Clark, and Snyder also suggest religious freedom promotes innovation and entrepreneurship. When people live without fear of government or social persecution for their beliefs the free exercise of religion seems to contribute to innovation and technological readiness. When societies are not stifled by religious boards, there is greater opportunity for individuals to promote innovative products and services. Moreover, when there is religious freedom “there is no threat that innovation will carry a death penalty if it crosses a religious red line such as blasphemy.”[21]

The three authors also test the hypothesis that religious freedom contributes to economic growth by using a structural equation model. The model tests the tandem effects of government restrictions on religion and social hostilities involving religion on economic growth as measured by gross domestic product. Their data concludes that “religious freedom contributes to better economic and business outcomes and that advances in religious freedom are in the self-interest of businesses, governments, and societies by contributing to successful and sustainable enterprises that benefit societies and individuals.”[22]

Ilan Alon and Gregory Chase’s quantitative study reveals similar results to Grim, Clark, and Snyder’s. In Religious Freedom and Economic Prosperity, Alon and Chase contribute to this field of study by measuring and discussing the impact of religious freedom. The authors use several regression models to determine “how much of the cross-country variation in per capita GDP can be explained by religious freedom and other freedoms.”[23] Prior works, including Paul Marshall’s Religious Freedom in the World, [24] and preexisting data sources, including the Fraser Institute’s measure of economic freedom, are leveraged in their analysis. [25] Their quantitative study assessed the impact of religious, civil, and political liberties on a nation’s economy in 75 countries. After eliminating cases for missing data, Alon and Chase were left with data on 54 countries for which all variables were available.[26] “One can observe,” the authors argue, “from the data that higher levels of freedoms are correlated with higher levels of per capita income. Economic freedom has the highest correlation with per capita GDP, followed by civil liberties and religious freedoms.”[27]

It is important to note that Alon and Chase credit economic freedom as the greatest contributor to a nation’s economic advancement. This is likely attributed to governments that promote laissez-faire policies, which can support an economically friendly environment for all institutions. Their study reveals the impact of economic freedom on an individual scale “seems to trump that of religious and other social and political freedoms.”[28] However, religious freedom was found to be highly relevant as well. In fact, the authors argue that “religious freedom has a positive impact on a country’s prosperity” and conclude that “it is in a nation’s long-run economic interest to expand not only economic freedom but also religious freedom.”[29] This brief review of modern-day thinkers supports the notion that religious freedom will likely result in better economic outcomes. The quantitative studies conducted by Ilan Alon, Gregory Chase, Anthon Gill, and John Owen provide data-driven evidence indicating there is a strong correlation between a nation’s economic prosperity concomitant with its religious liberties. The next portion of this analysis seeks to further prove this correlation by discussing the relationship between Pakistan’s economy and its strict regulations on religious freedom.


John Cosenza is a Market Research Analyst at Zitter Health Insights as well as a part time Research Consultant at the Mitchell Firm, a Washington D.C. based lobbying and consultancy firm. John graduated from Marist College with a dual degree in History & Political Science and graduated from Norwich University with a Master’s Degree in Diplomacy & International Business. John is an experienced professional with a unique combination of primary and secondary research skills as well as writing skills. He has experience working in the private and non-profit sector conducting secondary, qualitative, and quantitative research for multiple organizations including the world’s largest marketing and advertising agency, an international marketing consultancy firm, and a Washington, D.C. based Non-Government Organization (NGO). In addition to his research, John has co-authored multiple articles with Mr. John T. Pinna of the Mitchell firm focusing on international human rights issues and international religious persecution. John continues to work with political, think tank, and NGO leaders in the Washington D.C. metro area to advocate for international religious freedom. He can be reached at john.cosenza1@gmail.com or www.linkedin.com/in/john-cosenza/


[1] Alon, Ilan; Chase, Gregory (2005). “Religious Freedom and Economic Prosperity.” Cato Journal, Vol. 25, No. 2 (Spring/Summer 2005).

[2] Ibid, 401.

[3] Grim, Brian J; Clark, Greg; Snyder, Robert (2014). “Is Religious Freedom Good for Business?: A Conceptual and Empirical Analysis.” Interdisciplinary Journal of Research on Religion, Vol. 10, No. 4 (2014).

[4] Ibid, 3.

[5] Gill, Anthony; Owen, John M. IV (2017). “Religious Liberty and Economic Prosperity: Four Lessons from the Past.” Cato Journal, Vol. 37, No. 1 (Winter 2017).

[6] Ibid, 119.

[7] Ibid, 121.

[8] Ibid, 121.

[9] Ibid, 122.

[10] Ibid, 122.

[11] Ibid, I23.

[12] Ibid, 123.

[13] Ibid, 123

[14] Ibid, 125.

[15] Ibid, 125.

[16] Grim, Brian J; Clark, Greg; Snyder, Robert (2014). “Is Religious Freedom Good for Business?: A Conceptual and Empirical Analysis.” Interdisciplinary Journal of Research on Religion, Vol. 10, No. 4 (2014).

[17] Ibid, 7-8.

[18] The twelve pillars of microeconomic and macroeconomic national competitiveness are measured by the World Economic Forum’s multi-component Global Competitiveness Index (CG) and include: 1) primary education and health, 2) higher education and specialized training, 3) technological readiness, 4) innovation, a measure of new technological and nontechnological knowledge that also takes into account investment in research and development, especially by the private sector, 5) communications and transport infrastructure, 6) goods market efficiency, a measure of an economy’s openness and competitiveness, reflecting a minimum of impediments from government intervention, 7) business sophistication, including the quality of a country’s overall business networks and the quality of individual firms’ operations and strategies, 8) financial market development, 9) an institutional environment promoting wealth, including the soundness and fairness of the legal and administrative framework, 10) labor market efficiency, 11) market size, and 12) macroeconomic environment, which takes into account inflation and fiscal deficits, which limit a government’s reactions to business cycles and ability to invest in competitiveness-enhancing measures, 7.

[19] Grim, Brian J; Clark, Greg; Snyder, Robert (2014). “Is Religious Freedom Good for Business?: A Conceptual and Empirical Analysis.” Interdisciplinary Journal of Research on Religion, Vol. 10, No. 4 (2014).

[20] Ibid, 10.

[21] Ibid, 10.

[22] Ibid, 15.

[23] Alon, Ilan; Chase, Gregory (2005). “Religious Freedom and Economic Prosperity.” Cato Journal, Vol. 25, No. 2 (Spring/Summer 2005).

[24] Marshall, Paul. (2000). “Religious Freedom in the World.” Nashville, Tenn: Broadman & Holman.

[25]The economic freedom index’s five major components include: 1) size of government, 2) legal structures and security of property rights, 3) sound money, 4) freedom to trade with foreigners, and 5) regulation of credit, labor and business, 400-401.

[26] Alon, Ilan; Chase, Gregory (2005). “Religious Freedom and Economic Prosperity.” Cato Journal, Vol. 25, No. 2 (Spring/Summer 2005).

[27] Ibid, 401.

[28] Ibid, 405.

[29] Ibid, 405.


Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of International Christian Concern or any of its affiliates


 

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