Estimating the Institutional and Network Effects of Religious Cultures on International Trade

Abstract

SUMMARY As a social institution, religion directly influences economic behavior, including trade. Religious culture also impacts trade indirectly because it is part of a society's overall culture, which in turn influences many other formal and informal institutions that also directly influence economic activity. Finally, religious cultures support trade networks. Applying panel data for 84 countries for the years 1995–2000 to an augmented gravity model that distinguishes between the direct institutional, indirect institutional, and network effects of religious cultures, we find that only three of the world's eight major religious cultures directly stimulate international trade. However, the majority of the religious cultures seem to indirectly increase trade through their influence on societies' other institutions, and six of the eight major religions have network effects that increase trade.

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