Unit 12: Religion & Conflict: Theory & Practice of Economic Development MK 67

Prof. Dr.
Martin Petrick
Institute for Agricultural Policy & Market Research
Theory & practice of economic development MK 67

Unit 12: Religion & conflict
1
JUSTUS-LIEBIG-UNIVERSITÄT GIESSEN
Religion & economic development
Theory & Practice of Economic Development 2

Protestant ethic & capitalism
Thesis: Protestant ethic of Calvinism is a powerful

force behind early development of capitalism.
• Calvinism emphasises virtues of hard work &
asceticism
• Doctrine of predestination: accumulation of
wealth a proof of God’s salvation
• No ban on usury & taking interest, critical with
charity as it encourages laziness
Max Weber (1864-1920), The Protestant Ethic and the Spirit of Capitalism; Roland 2014, 288.

Egalitarian norms & development

• Particularly in Africa, strict egalitarian & collectivist norms
prohibit individuals from aspiring to personal achievement or
becoming prosperous
• Productive individuals viewed with suspicion & pressured into
sharing their surplus
• Fear that community will be undermined or successful
individuals leave collective informal redistribution
(=insurance) system
• No obligation to repay loans to lenders who are richer
• Ancient norms of collective survival that hamper
entrepreneurial spirit today
Roland 2014, 303f.

Religious taboos on interest

• “Sin of usury” historically promoted by the Catholic
Church
• Current-day prohibition of interest on loans in Islam
(e.g. a violation of national law in Pakistan)
• Circumvention by using intermediaries who allow
repayment in instalments but for a higher price
entailing the interest
• Possible breaks on financial intermediation
Roland 2014, 304f.

Islam & inheritance laws

• Islam failed to modernise during Renaissance due to defunct
inheritance laws
• Sharia law requires that 2/3 of an estate reserved for family heirs;
daughter receives 1/2 of a son
• Inheritance law prevent formation of large & lasting business
partnerships
• Islamic foundation (waqf) providing social community services
(Mosques, irrigation canals, schools) that could not be modified
after the founder passed away
• Experimentation with primogeniture (oldest son inherits
everything) in Christian cities much more conducive to emergence
of business corporation
Roland 2014, 305f.

Further reading

The dismal development record of Muslim

countries

Past glory of the Islamic world

• ~800 AD Islamic world more urbanised than rest of
Europe
• 1453 Ottoman emperors conquer Constantinople
• Provision of basic human rights to non-Muslims
• Common Arab language a basis for long-distance
trade
• Sharia law a more functional legal basis for
administration, trade & gender arrangements than
its alternatives
Koopmans 2020, Das verfallene Haus des Islam, 18

Static & dynamic efficiency of societies
Static efficiency = best arrangement in a particular place

at a given point in time
• Islam in early middle ages
• Soviet communism in 1950s
Dynamic efficiency = successful adaptation to changing
circumstances
• Role of individual creativity, competition, choice for
innovation
• Democratic societies may sometimes be slow to adjust,
but commonly more resilient & dynamic
Koopmans 2020, 17.

Two responses in the Islamic world

Attempts at secular modernisation & westernisation in
1920s-60s
• Kemal Atatürk in Turkey
• Reza Shah in Iran
• Gamal Abdel Nasser in Egypt
Islamic fundamentalism: 1979 as a pivotal year
• Iranian revolution → shattered relations with US
• Grand Mosque seizure in Mecca → stricter Wahhabi rule
enforcement by Saudi Arabia
• Soviet invasion in Afghanistan, withdrawal in 1989 → rise of Taliban
regime
Koopmans 2020, 22

Fundamentalist opinions in various countries
If religion & science contradict

each other, religion is always
right
My religion is the only
acceptable religion
Data collection ca. 2015.

Source: Koopmans 2020, 37.
Trailing the rest of the world after 1970

• Majority of non-Muslim countries moved to democracy
• Religious freedoms more advanced in almost all non-Muslim
countries (except China, Myanmar)
• Women’s rights more advanced in most countries
• Most civil wars today fought by Muslim countries
• Rising Jihadist terrorism
• Relative decline in wealth compared to rest of world
• Muslims display poorest integration record among all
immigrants in Western societies
Koopmans 2020, 20

Source: Center for Systemic Peace Global Report 2017, 11.


Three reasons why Islam is in crisis

• Coalescence of religion & state
• Discrimination of women
• Disregard of secular knowledge
Koopmans 2020, 228

Coalescence of religion & state

• Non-Muslim beliefs & practice often outlawed
• State power becomes a sacred resource
• Cause of violent conflict
• Restricts civil liberties
Koopmans 2020, 228

Discrimination of women
• Women marry young, get many children, little
access to education
• Most women remain outside the labour
market, contribute little to economic growth
• Population growth fuels economy-wide
unemployment & hopelessness for youth
population
Koopmans 2020, 231

Disregard of secular knowledge

• Supremacy of religion keeps clerical leaders in
power
• Absence of secular education beyond
Madrasas (Quran schools)
• Stifles innovation & economic growth
Koopmans 2020, 232

Islam a cause of despotism?

• Platteau 2011: Politics dominates religion, not vice versa
• Unlike Catholicism or Christian Orthodoxy, Islam lacks
centralised institutions (no constitutional law, many
different interpretations, no central authority on earth)
• This lack makes it prone to
(a) political manipulation,
(b) emergence of extremist factions leading to “religious
outbidding”
• Islam shares this fate with other ideologies, such as
ethnicity, nationalism, language
Platteau 2011, Political Instrumentalization of Islam and the Risk of Obscurantist Deadlock, World
Development 39

Christian Protestantism & democracy

• Protestantism also lacks centralised institutions
• However, fiscal needs of European sovereigns forced
them into bargains with merchants & bankers who
demanded civil liberties & accountability in response
This path blocked in Muslim countries by
• international aid,
• resource curse,
• recognition of juridical, not empirical statehoods by
the international community
Platteau 2011, 257

Violent conflict & development


Theories of violent conflict

• Due to its destructive consequences, war seems always
inefficient compared to non-violent bargain
• Can it be rational to wage war?
Two theories:
• Asymmetric information concerning relative strength of
parties
• Inability of parties to abide by peace treaties (a
commitment problem)
Roland 2014, 538ff.

Misjudging your rival
• Each party wants to mask its real military strength

• Simultaneously, find out about capabilities of
opponent
• Both parties may (rationally) misjudge strength or
willingness to retaliate of other party
• Learning effects?
Roland 2014, 539f.

Lacking commitment to peace deals
• Absence of external enforcement for peace treaties

(no world government)
• Changing military strengths may provide incentives
to first conclude treaties & then overthrow them
Roland 2014, 540f.

Greed vs. grievance theory of civil war
• Greed: power struggle to take control of a country’s

natural / economic resources
Examples: Nigeria, Angola, Sierra Leone (oil, diamonds),
Colombia (drugs), DR Congo (minerals)
• Grievance: retaliation for harm done, oppression,
demand for ideological change, hatred for other groups
Examples: Sri Lanka (Tamil Tigers), Cuba (socialist
revolution)
Roland 2014, 545ff., based on Collier & Hoeffler 2004.

Conflict determinants in greed model

• Share of natural resources in exports (+)
• Geographic dispersion of population as an inverse
measure of political control (-)
• Per capita income as opportunity costs of waging war
(-)
• Social fractionalisation that hampers rebellion (-)
• History of conflict (+)
Roland 2014, 546

Conflict determinants in grievance model
• Inequality of wealth & income (+)

• Ethnic fractionalisation (+)
• Level of political representation (-)
Roland 2014, 546

Results for greed model
Roland 2014, 547.

Results for grievance model
Roland 2014, 547.

Long-term effects of war: negative

• Destroys lives, human capital, infrastructure
• Disrupts schooling
• Destructs the natural environment
• Destroys families & social communities
• Endangers civil liberties
• Cause health crises & famines
That is “anti-development”
Roland 2014, 552.

Long-term effects of war: positive

• Encourage technological progress based on military
technology
• Transport infrastructure development
• Steam engine, nuclear energy, Global Positioning System
(GPS)
• Enable nation building
• Social & political progress to empower demobilised
soldiers (voting rights)
Roland 2014, 552.

North/Wallis/Weingast theory of Social Orders
Open Access Order
Increasing
• Control of violence
• Durability of
organisations Discrete, irreversible transition
• Rule of law for elites
• Economic prosperity
Limited Access Order
Mature
Dominant coalition directs
organisations to create &
External distribute rents, to keep
shocks Basic violence in check
Dilemma: violence control
enables short-term rents, but
inhibits long-term economic
Fragile growth
Source: Author based on North/Wallis/Weingast 2009: Violence and Social Orders,

Cambridge.
34
Recent findings on the causes of violence

Kinship structures promote war in Africa

Hypothesis:
• Segmentary lineage groups facilitate mobilisation of
combatants in case of disputes or conflicts between
individuals
Supported by ethnographic studies
Quantitative analysis linking presence of segmentary
lineage to geo-coded conflict data
Comparing pairs of ethnic groups within & without
segmentary lineage societies
Studying role of retaliation & escalation
Moscona / Nunn / Robinson 2020, Segmentary Lineage Organization and Conflict in Sub-
Saharan Africa, Econometrica 88, https://doi.org/10.3982/ECTA16327.
A hypothetical segmentary lineage society
A conflict between individuals i & ix would lead to war among segments A & B.
Source: Moscona et al. 2020, p. 2000.
Segmentary lineage classification & conflicts
Source: Moscona et al. 2020, p. 2010.

Findings on kinship structures

• Segmentary lineage groups experience approx. double
the number of conflict incidents compared to groups
without segmentary lineage
Association is stronger
• for retaliatory conflicts (i.e. conflicts in response to a
previous conflict),
• the more fatalities the conflicts involve,
• the longer the conflicts endure.
Overall evidence that retaliation & escalation mechanisms
promote war between kinship groups
Moscona / Nunn / Robinson 2020.

How food price shocks promote war in Africa

Hypothesis:
• Global food price spikes reduce conflict among food
producers over control of territory, but increase
conflict among consumers over appropriation of
surplus
“Factor conflict”: rising prices increase opportunity
costs of becoming a soldier (e.g. for farm workers)
“Output conflict”: rising prices increase economic
scarcity of food for everyone & lead to food riots
McGuirk & Burke 2020, The Economic Origins of Conflict in Africa, Journal of Political
Economy 128.
Factor conflict from a food price shock
FAO food price index
Factor conflict data measures permanent seizure of territory with fatalities.

Source: McGuirk & Burke 2020.
Output conflict from a food price shock
Output conflict data measures transitory riots, protests, violence against civilians.
Output conflict projections up to 2050
Output conflict driven by population growth & climate change.

Findings on food price shocks

• Evidence in favour of causality from economic shocks
to violence (“opportunity cost theory of conflict”)
• Effects may differ among different types of
households
• Rising crop prices will shift conflict from rural to urban
areas
• Workfare programmes may prevent farmers from
joining armed groups, programmes may shift to urban
areas when prices rise
• Climate change may affect violence substantially
McGuirk & Burke 2020.
Debriefing

What do development economists do?

1. Diagnose problems
2. Establish causalities
3. Design policies
4. Think of implementation in terms of political
feasibility and administrative capacity
5. Assess outcomes for results-based management
De Janvry & Sadoulet 2016.

4 building blocks of “thinking development”

1. Good mastery of concepts of economic analysis
2. Good knowledge of current development issues
3. Keep a perspective on the history of development
to not reinvent the wheel
4. Willingness to conduct detailed diagnostics &
establish causal analysis

7 motives to become a development economist
1. A job in a booming field, uniquely oriented at policy

advice and problem solving
2. Intellectual interest, with much to discover
3. A distinct field of economics, interdisciplinary & data-
rich
4. In the best long-term interest of the rich world
5. An international, possibly exotic adventure
6. An act of solidarity & altruism (“it could have been me”)
7. A moral responsibility at a planetary scale (“a world free
of poverty”)

Unit 12: Religion & Conflict: Theory & Practice of Economic Development MK 67

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Prof. Dr.

Theory & practice of economic development MK 67

Religion & economic development

Theory & Practice of Economic Development 2

Protestant ethic & capitalism

Thesis: Protestant ethic of Calvinism is a powerful

Theory & Practice of Economic Development 3

Egalitarian norms & development

Roland 2014, 303f.

Theory & Practice of Economic Development 4

Religious taboos on interest

Roland 2014, 304f.

Theory & Practice of Economic Development 5

Islam & inheritance laws

Roland 2014, 305f.

Theory & Practice of Economic Development 6

Theory & Practice of Economic Development 7

The dismal development record of Muslim

Theory & Practice of Economic Development 8

Past glory of the Islamic world

Theory & Practice of Economic Development 9

Static & dynamic efficiency of societies

Static efficiency = best arrangement in a particular place

Theory & Practice of Economic Development 10

Two responses in the Islamic world

Theory & Practice of Economic Development 11

Fundamentalist opinions in various countries

If religion & science contradict

Data collection ca. 2015.

Trailing the rest of the world after 1970

Theory & Practice of Economic Development 13

Source: Center for Systemic Peace Global Report 2017, 11.

Source: Center for Systemic Peace Global Report 2017, 23.

Three reasons why Islam is in crisis

Theory & Practice of Economic Development 16

Coalescence of religion & state

Theory & Practice of Economic Development 17

Theory & Practice of Economic Development 18

Disregard of secular knowledge

Theory & Practice of Economic Development 19

Islam a cause of despotism?

Theory & Practice of Economic Development 20

Christian Protestantism & democracy

Theory & Practice of Economic Development 21

Violent conflict & development

Theory & Practice of Economic Development 22

Source: Center for Systemic Peace Global Report 2017, 27.

Theories of violent conflict

Roland 2014, 538ff.

Theory & Practice of Economic Development 24

Misjudging your rival

• Each party wants to mask its real military strength

Roland 2014, 539f.

Theory & Practice of Economic Development 25

Lacking commitment to peace deals

• Absence of external enforcement for peace treaties

Roland 2014, 540f.

Theory & Practice of Economic Development 26

Greed vs. grievance theory of civil war

• Greed: power struggle to take control of a country’s

Theory & Practice of Economic Development 27

Conflict determinants in greed model

Roland 2014, 546