Does Islam promote growth: evidence from Arab Muslim countries and non-Arab Muslim countries

Abstract

Purpose

This paper aims to investigate the impact of Islam, as a set of moral and cultural values, on economic growth and development for 17 Muslim countries over the period 1990–2019.

Design/methodology/approach

To identify the relationship between Islam and economic growth, the authors have proceeded with an empirical panel data analysis using the Autoregressive Distributed Lag (ARDL) model. The study is conducted initially on a sample of 17 Muslim countries and then on 2 sub-samples composed of 12 Arab Muslim countries and 5 non-Arab Muslim countries.

Findings

The empirical analysis showed a significant negative relationship between Islam and economic growth for the Arab-Muslim countries. While for the non-Arab Muslim countries, the relationship remains positive. Following the introduction of the interactive social variables (unemployment and illiteracy), the authors show that increasing unemployment exacerbates the negative effect of Islam on growth. While the effect of illiteracy remains statistically insignificant. However, for non-Arab Muslim countries, the positive effect of Islam on growth is all the greater as these countries have large social contemplation. However, the introduction of the interactive cultural variables (uncertainty avoidance index and long run orientation), show that the positive effect of Islam on growth is all the more important as the non-Arab Muslim countries have a wider cultural value system. While for the total sample and the sub-sample of Arab-Muslim countries, the cultural dimension does not affect the relationship between Islam and economic growth.

Research limitations/implications

Although there are more religions, the authors have considered only Islam as its relationship with economic, social and cultural development and its influence on the entrepreneurial culture is problematic. Maybe a comparative study between different religions offers us a more convincing result.

Practical implications

Social conditions, cultural heritage and race (Arab or non-Arab) play an important role in determining the relationship between Islam and economic development.

Social implications

The effect of Islam remains dependent on Islamic thought and its long-term orientation, uncertainty avoidance and the level of social value creation in the countries where it is practiced.

Originality/value

On the theoretical and on the empirical level, the analysis of the relationship between Islam and development is rarely addressed in the relevant literature because of its sociologically sensitive aspect. Islam would have a positive effect on growth when it evolves in countries that have built their growth on an extroverted and developed economic model and an adequate social and cultural value creation system. However, unemployment, illiteracy, cultural patrimony and race of the Muslim population (Arab or non-Arab) plays, in the long run, a very important role in determining the relationship between Islam and economic growth.

Citation

Khalfaoui, H. and Guenichi, H. (2022), "Does Islam promote growth: evidence from Arab Muslim countries and non-Arab Muslim countries", International Journal of Law and Management, Vol. 64 No. 2, pp. 206-224. https://doi.org/10.1108/IJLMA-07-2021-0166