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Topics: Religion, International trade, Islam Pages: 24 (8379 words) Published: April 18, 2015
On the Influence of World Religions on International Trade

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ON THE INFLUENCE OF
WORLD RELIGIONS ON
INTERNATIONAL TRADE
Matthias Helble
As the world economy is integrating, trade between countries is growing rapidly. The exchange of goods not only has an economic, but also a cultural dimension. This paper investigates the possible ways that religion influences international trade patterns. It studies the view of the five world religions, namely Hinduism, Judaism, Buddhism, Christianity, and Islam, on

economic activity, and trade in particular. Analyzing empirically trade flows between 151 countries, the paper finds an impact of religion on trade. Furthermore, the results indicate that religious openness boosts trade performance of countries. Given these

results, the paper derives several policy recommendations.1

INTRODUCTION
The individual person is at the origin of all economic activity. The individual’s personal and cultural traits decide how and with whom he or she interacts economically. Whereas personal characteristics may be assumed to be purely random, cultural traits are not; the latter may have an important impact on economic behavior. The economic behavior we are focusing on in this paper concerns international trade. With an annual growth rate of around 6 percent, world trade is one of the major engines of globalization. Even though the number of trading relationships seems to remain stable (Helpman et al. 2005), more and more goods are being exchanged. The exchange of goods does not stand by itself and always takes place in a cultural context. Therefore, the more goods are exchanged between Matthias Helble is a Ph.D. candidate in International Relations at the Graduate Institute of International Studies, Geneva and at Yale University (helble2@hei.unige.ch). 7

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Matthias Helble

countries the more inter-cultural interaction between trading partners is necessary. Some authors argue that globalization brings down cultural differences (Barber 1995). However, over the recent years we have witnessed a surge in conflicts that have been fought over cultural rather than politicalideological issues (Huntington 1996). Furthermore, a globalizing world does not only create opportunities, but also fears. One of the strongest fears concerns the preservation of cultural identity, which is considered as a valuable asset, but menaced by globalization. But what are the determinants of culture? Why is culture such a sensitive issue? Culture can be defined as: “Behaviour peculiar to Homo sapiens, together with material objects used as an integral part of this behaviour. Thus, culture includes language, ideas, beliefs, customs, codes, institutions, tools, techniques, works of art, rituals, and ceremonies, among other elements (Britannica 2005).” Beside individual differences between people, culture is the main driving force that separates humans into groups. Out of the many elements that define culture only two are readily observable: language and religion. Language is not only a means of communication; it also carries ideas, customs, and values. Religion may even be more influential for the human behavior. Many religious beliefs encompass rules for every aspect of daily life. For example, one finds rules on nutrition in nearly all world religions. Religious beliefs have also been highly influential in institution building. It is therefore only logical to conjecture that religious beliefs also impact economic exchange within and between religions. The questions that come to mind in this context are: Which religion is especially trade-promoting? Are there product groups for which religion has a more important role to play than for other product groups? Is there an influence when analyzing economic development?

Whereas many studies have been undertaken to show the impact of language on trade (Melitz 2004), relatively few studies exist that analyze religion as a determinant of trade. In numerous...

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