The Effects of Religion on Economy: Comparison of a Capitalist Muslim Country and a Capitalist Christian Country

Even though nowadays religion may not be considered as an important factor for economic growth in capitalist economies, its characteristics of personal beliefs and institutions can be add-ins to economic and societal development. However, at the same time religion can also hinder or delay economic development. Investigating the relationship between religiosity and economic growth may present different results for different countries due to its diverse nature and due to different interpretations of religion in various cultures. Religious institutions and individuals can foster growth in an economy by improving the quality of human resource and promoting confidence in a society. Furthermore, some religious institutions and individuals can contribute to violence, restriction of capital accumulation and profit, which leads to a decrease in economic growth. The main question of this study is whether religious beliefs have a positive or a negative impact on economic progress of capitalist economies. Based on the study of Indonesia and Mexico, empirical evidence, after conducting a multiple linear regression analysis, indicates that religiosity and economic development are negatively correlated in Indonesia. On the other hand, results reveal that there is an insignificant relationship between religion and economic growth in Mexico. The quantitative data used in this study is derived from The World Atlas database for GDP Per Capita income from the year 2000-2017. The three measures of religious commitment were sourced from various databases such as World Values Survey, Gallup World Poll, Pew Research center and International Survey Program. In Indonesia it is suggested that religiousness should be encouraging idleness and not too much reliance on faith. In Mexico on the other hand, the players in the economic field have separated their economic activities from their religious practices.