Handbook on Islam and Economic Life
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Handbook on Islam and Economic Life

Edited by M. Kabir Hassan and Mervyn K. Lewis

Handbook on Islam and Economic Life is a unique study, one of the first of its kind to consider Islam within a broader economic sphere. Covering a wide breadth of topics and research, it explores how Islam impinges upon and seeks to shape major aspects of economic life including economic organisation, business and management, finance and investment, charity, mutuality and self-help, and government. It concludes by analysing the link between religion and development, the present economic situation in Arab countries and the causes of underdevelopment in Muslim countries.
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Chapter 28: Religion and development

Volker Nienhaus


Religion and development are linked in so far as religion is one determinant of human behaviour, and development is one outcome of human behaviour. But development may change the way that people look at or understand religion, and thus the relationship is multi-directional. The economics of religion (Iannaccone, 1998, 2006; McCleary, 2008; Witham, 2010; Mitchell, 2011) investigates causal relationships between religion and development in both directions, namely the impact of development on religion, and the impact of religion on development. This chapter covers only the second aspect, but its scope is more limited still. There are two major types of studies in the economics of religion. The first group shows that many religions create structures and institutions that can support economic development (measured by the growth of income and wealth). For example, religions facilitate the formation of social capital and trust, which reduces transaction costs, enhances efficiency and thus promotes development. The second group of studies focuses on the contents and teachings of religions and their possible links to development – either through particular behavioural patterns or through specific institutions. This chapter will deal mainly with this second approach and the content analysis of religious teachings. Content analysis of religious teachings or belief systems has a long tradition (dating back to Adam Smith), but the most widely discussed contribution was made by Max Weber ([1904–05] 2001) in his book The Protestant Ethic and the Spirit of Capitalism.

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