Islam, geography, and economic growth

Marcus Noland argues that, contrary to conventional wisdom, adherence to Islam does not lead to reduced economic fortunes:

[N]o robust relationship between adherence to major world religions and national economic performance is uncovered, using both cross-national and subnational data. The results with respect to Islam do not support the notion that it is inimical to growth. On the contrary, virtually every statistically significant coefficient on Muslim population shares reported in this paper—in both cross-country and within-country statistical analyses—is positive. If anything, Islam promotes growth.

Tyler Cowen disagrees:

These correlations miss the point. To the extent that Islam has negative effects, it operates through indirect mechanisms. Islamic countries have a difficult time establishing democracy and rule of law and good economic policy. True, if you include enough proxy variables in the regression — such as good policy — the influence of Islam will wash out. Islam is an indirect cause of some problems, not the direct cause, and the direct causes may well have more statistical significance. But the point remains that Islam can influence the variables that matter.

Kieran Healy says this nut may never be cracked:

The relationship between religious beliefs and practices, on the one, hand and economic prosperity, on the other, is a very tricky question. It’s kept comparative sociologists busy for more than a century.

Kieran goes on to quote Ernest Gellner, a bigwig in the study of nationalism, who says:

I like to imagine what would have happened had the Arabs won at Potiers and gone on to conquer and Islamise Europe. No doubt we should all be admiring Ibn Weber’s The Kharejite Ethic and the Spirit of Capitalism which would conclusively demonstrate how the modern rational spirit and its expression in business and bureaucratic organization could only have arisen in consequence of the sixteenth-century neo-Kharejite puritanism in northern Europe.

Read all of the posts — interesting debate. There’s a bit of talking past each other — Cowen is much more concerned with state structures in Muslim-majority countries, while Noland is concerned with effects on individuals as well. What intrigues me is Gellner’s comment. In international relations theory and economic history, a common argument for why Europe grew the way it did after 1500 is that geographic barriers permitted the proliferation of states and religious sects, decentralizing power enough to create a space for economic actors to operate free of state repression. One wonders if the curse of the Middle East is not its religion, but rather the absence of those geographic barriers. UPDATE: Brad DeLong is similarly intrigued by this debate, and has the following thoughts on the subject:

We are not Marxists: the economic base constrains but does not determine religious doctrine and practice, which in turn influences the evolution of the economic base. We have a powerful elective affinity between commerce and Islam back in the Middle Ages (Muhammed, after all, was a merchant). But we have no such affinity visible between Islamic doctrines and industrial technology, not since 1500…. It is a great puzzle and a mystery. I’m inclined toward political and organizational explanations–that the key problem lies in the form taken by the Muslim state seen not as an (incredibly imperfect) system for the collective self-organization and regulation of society, but as an alien military-bureaucratic organization sitting on top of it: slaves on horses, in Patricia Crone’s formulation, at the service of whatever dynasty of ghazis or nomads most recently conquered the settled lands.

Read the whole post. ANOTHER UPDATE: This book may be of interest to readers of this post (Thanks to alert reader D.G. for the link)