Thursday, April 11, 2013

Religion and international trade - Are they linked?

Came across this rather interesting analysis of the possible relationship of religion and international trade. Do similarities in religion and other cultural characteristics promote trade? One would never have thought about the possible co-relation between a religious orientation of a country and its trading relations. Trade after all was propelled by business interests. 

Tomas Rees writing in Epiphenom analysed the study of Chong Wha Lee titled "Does religion affect international trade in services more than trade in goods?" Do countries following similar religious traditions have a greater possibility of enhanced trade in goods and more so for services? the study indicated thus:
The results indicate that religion creates positive institutional and network effects, increasing international trade in goods and services; these effects enhance trade in services more than trade in goods; institutional effects exert a greater trade-creating effect than deliberately designed institutional regimes, but a lesser effect than historically established cultural regimes, such as common language and colonial ties; network effects on trade in services, although less significant than common language and colonial ties, promote trade to nearly the same degree as regional trade agreements and shared legal systems. Religion establishes co-religious networks that positively affect interpersonal trust, thereby reducing institutional distances between countries. This effect is similar to that of trading diaspora.
Another interesting tool to analyse the growth of trade in modern societies. It is not always about trade barriers, is it? 


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