The Islamic world is disproportionately affected. More than one-in-two (57%) Muslim-majority countries have high religious hostilities, more than double that of other countries (25%), as shown in the chart to the left.
Although religious hostilities affect countries throughout the world experience, Muslim-majority countries consistently have higher levels of a range of religious hostilities than other countries and by wide margins. For instance, Muslim-majority countries are more than three times more likely than other countries to have religion-related war, terror or sectarian violence, as shown in the chart below.
These religious hostilities disrupt markets, trade and development in numerous parts of the Islamic World. This leads the talented young as well as risk-averse investors to look elsewhere for opportunity, compounding socio-economic conditions that contribute to the hostilities.
By contrast, research indicates that economic competitiveness is stronger in countries where religious freedom is respected by governments and societies.
The typical government response to religious hostilities is to tighten restrictions on religion. But, contrary to common perceptions, a solid body of empirical and historical research shows that piling on additional restrictions does not ensure peace and stability, but rather can fuel additional grievances. Indeed, research shows that the price of denying religious freedoms is far higher than protecting them.
Specifically, as social hostilities involving religion rise, government restrictions on religion rise, leading to more violence, setting up a religious violence cycle that become difficult to break, with direct adverse effects on business, foreign investment and world economies. Two examples help demonstrate how religious restrictions and hostilities are bad for business:
(1) Blasphemy Laws. Pakistan’s speech-restricting blasphemy laws often sow discord rather than the purported aim of promoting peace, as two high ranking government officials were recently assassinated for merely questioning the laws. These laws also have a direct negative impact on businesses. There are “recorded instances of business or personal rivals accusing each other of blasphemy to extract revenge for a past grievance. The blasphemy laws in Pakistan have not only been used in cases where individuals have been accused of specific blasphemies, they have also been used to ban websites like Facebook, YouTube, and Wikipedia because of content that would be considered sacrilegious” (Tarin and Uddin 2013, p. 19).
(2) Egypt: Religious Violence Cycle & the Economy. The religious violence cycle is playing out today in Egypt in the back-and-forth social and political struggle between the supporters of the Muslim Brotherhood and the coalition opposing them. Of course, this struggle directly impacts the important tourist industry, but it also drives away foreign investment. And this has adverse effects on foreign economies.
To end the cycle of religious violence and its negative impact, observers of post-Mubarak Egypt concluded that all factions in society – including Islamists – must feel that their voices are heard and that “special attention should be paid to the economy …” (Shaikh and Ghanem 2013, p. 2).
Also, as the role of women is debated within Islam and between Muslims in Egypt and countries ranging from Morocco and Iraq to Pakistan and Indonesia, religious restrictions on women also impact economic outcomes as the future health of economies is related to the economic opportunities afforded women. Furthermore, not only do religious restrictions have adverse effects on the economy, but a poor economy can reinforce religious intolerance, adding to the religious violence cycle. And perhaps most telling, as Egypt’s religion-related tensions have grown, Egypt’s young entrepreneurs desire to move outside the country rather put their hopes in their home.