Is God Good for Trade?

Abstract

SUMMARY 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. In the gravity equation literature common religion is often used as a control variable, without distinguishing between religious groups. This paper investigates the possible ways in which religion influences international trade patterns. Analyzing empirically trade flows between 151 countries, the paper finds that the five world religions, namely Hinduism, Judaism, Buddhism, Christianity, and Islam, have different impacts on trade. For inter‐religious trade the study indicates that several religions have clear preferences with whom to trade or not. Furthermore, the results indicate that religious openness boosts trade performance of countries.