By the 19th century, Protestant areas of Prussia had significantly higher literacy rates than neighbouring Catholic regions. A new study says that gap is one piece of a larger story: religion has shaped economic development far more than many economists have recognised.
The research was published by RFBerlin in May. It is based on a review by Professor Sascha Becker of the University of Warwick, Professor Jared Rubin of Chapman University and Professor Ludger Woessmann of the University of Munich. They argue that religious beliefs, institutions and practices have influenced education, financial systems, family size, technological innovation and political institutions, and left a lasting mark on economic performance.
Standard growth theory looks mainly at investment, technology and human capital. The authors say religion has often worked behind the scenes, shaping the very factors those theories use. “Religion affects economic growth not just through individual beliefs, but by shaping the fundamental institutions and norms that govern society,” the study says.
Schools and literacy
The clearest example is the Protestant Reformation. Martin Luther believed ordinary believers should read Scripture themselves, which pushed Protestant regions of Europe to set up schools. The study says that educational lead helps explain why those regions often grew faster, and it cuts against Max Weber’s well-known theory that credited a distinct “Protestant work ethic.” Protestant missionaries later built schools across Africa, Asia and Latin America, and regions where they worked still show advanced literacy and stronger educational mobility generations on.
Education is not always a plus. The researchers say mainstream Protestantism and traditional Judaism built literacy and numeracy that fed later prosperity, while madrasas and ultra-Orthodox yeshivas sometimes put theology ahead of skills the wider economy values. They caution that the picture varies by tradition, period and place.
Money, printing and births
Christianity and Islam both once restricted lending at interest. Workarounds emerged, but the study argues the limits shaped banking and commerce for centuries. Regions with a long history of Ottoman rule still trail neighbouring areas in banking penetration by about 10%.
Religious institutions have both helped and held back innovation. The Ottoman Empire banned printing in Arabic script for 250 years, which the researchers say slowed the spread of knowledge. In late-19th-century Prussia, cities where different religious groups lived side by side showed stronger patent activity.
Protestant regions of 19th-century Europe also had lower birth rates than Catholic areas, partly because of the emphasis on schooling. The authors say those demographic shifts helped set up long-term growth.
Policy and gaps
The report says governments tend to treat religion as background culture. It cites Egypt and Turkey, where education reforms meant to reduce religion’s influence sometimes strengthened religious movements instead. It also finds that societies accommodating religious diversity tend to gain from a wider exchange of ideas, while persecution can destroy skills, networks and human capital.
Most existing research covers Christianity, Judaism and Islam. The authors acknowledge that less is known about Buddhism, Hinduism and Confucianism. Their conclusion is blunt: “The central lesson is clear: The conventional growth literature’s neglect of religion represents a significant gap.”
