Figuring out what makes countries rich or poor has spawned the field of Development Economics. Is prosperity simply the result of politics and economics—or could there be a higher power at work? The idea that faith brings blessing runs deep, found in sacred texts like Genesis, where God promises to bless the nation of Israel through Abraham and his descendants. In today’s world, this conviction lives on: some see the wealth of America as evidence of divine favor born from its Christian roots, while others raise skeptical eyebrows at less prosperous, but deeply religious, nations such as Papua New Guinea and Timor-Leste. What, then, is the real relationship between religious belief and a country’s economic prosperity? Like most things in economics, it’s anything but straightforward.
Working hard for God
Links between religion and economic growth have been discussed since the late 18th century. The first formal look into this came from Max Weber’s classic work The Protestant Ethic and the Spirit of Capitalism. In the late 19th and early 20th century, Weber observed that many of the most economically prosperous regions in Europe were also ones with majority Protestant believers. He argued that Protestants, considered a ‘reformed’ branch of Christianity, held a distinctive ethic towards work. At the time, while other Christian denominations discouraged the pursuit of worldly success and material wealth, the protestants considered occupations a “calling” from God. Further, pursuing work and securing financial success was not only not frowned upon, but instead considered a sign of God’s blessing to fulfilling a higher purpose. Thus, Weber argues that as the number of protestants increased, the population grew more capitalistic towards productive economic activity, leading to greater economic prosperity wherever the protestant faith was spread.
This idea has a certain intuitive appeal. Religion, and culture more broadly, instills a set of values in the population be it honesty, hard work, or risk-taking. This in turn manifests in some of the country’s economic fortunes. But despite the attractiveness of Weber’s explanation, it faced criticism from contemporaries and later scholars spanning historians to economists. Economist Henryk Grossman noted that the shift towards greater capitalist economic activity may be because of the eviction of peasants from living on common land at the time driving a need to work for income, rather than any motivation by religious obligation. Another criticism is the failure to consider the ethnic makeup of the population. In Germany, where Weber made his observations, the higher paid Germans were typically protestants while the poorer Polish immigrants were typically catholic. What Weber noticed may have been discrimination between Polish and German workers, rather than any religious affiliation. In more modern commentary, Nobel Prize-winning economist Daron Acemoglu’s famous book “Why nations fail” addresses the long term implications, noting that while Netherlands and the UK were economically successful protestant countries, it didn’t take long for France, a predominantly catholic nation to catch up. Neither does it capture the relationship of growth in East Asian countries where protestantism was lacking.
For all of Webber’s failings when proposing the idea, his work has inspired a whole heap of literature examining the causal relationship between religion and economic growth, in an attempt to empirically verify or disprove his arguments. While there’s no one solid answer to whether Webber was really correct, or whether religion itself is a determinant of economic growth, there have been a few nuggets of truth in the century since Webber’s first quips.
The power of faith
Inspired by Webber’s assertions, Barro and McCleary (2003) studied whether religious beliefs were actually a determinant of economic growth. This was a difficult task - not only is religion hard to measure, but there is also potential two-way causation between religion and economic growth. While a relationship could exist where religious beliefs influence growth, prior research found stronger evidence of the reverse, where economic growth actually made people less religious. In quite a clever selection of instrumental variables, they were able to isolate only the relationship running from religion to economic growth.
The result? Economic growth responded positively to religious beliefs, particularly those of heaven and hell, but negatively to church attendance. In particular, between the carrot of heaven and the stick of hell, hell was the stronger motivator for growth. But the finding of church attendance being bad for economic growth was unexpected. Barro and McCleary interpret this as evidence that economic growth depends more on the strength or depth of belief than on outward religious practice. In other words, it is how much you believe, not how often you participate, that matters most for economic growth. This challenges the common assumption that religious communities, through activities like church attendance, primarily generate economic benefits by fostering cooperation and social capital. Instead, while personal beliefs may cultivate individual traits (such as honesty, thrift or delayed gratification) conducive to creating economic prosperity, church attendance may be a drain on social resources by diverting time from more productive activities. Ultimately, it seems that what you believe matters more than how much you participate in the rituals of religious life.
The power of reading
Becker and Woessmann (2009) provided another compelling empirical exploration into this relationship. In their paper, they reexamined evidence for links to protestantism with economic growth. In Weber’s time, his observations were indeed correct. The most economically prosperous countries were those with high protestant populations. In fact, Protestants earned 6.9% more than Catholics on average in Germany at the time.
But Becker and Woessmann propose a different story about how this link came to be. Rewind five centuries: Martin Luther, a famous priest, passionately insisted that all Christians should read the Bible for themselves, deepening their faith through personal engagement with scripture. There was a problem—most people in 16th-century Europe couldn’t read! As a response, Luther advocated for broad-based education, which eventually drove the development of universal primary schooling in Germany and elsewhere in Protestant Europe.
The result was a curious side effect: the same countries with large Protestant populations also boasted unusually high literacy rates for their era. This boom in human capital, a more educated and literate populace, became the foundation of sustained economic growth. As Becker and Woessmann argue, Weber was right in observing prosperity in Protestant regions, but his explanation was a little off. Rather than a unique Protestant “work ethic”, it was the unintentional product of a religious movement that emphasized literacy and education.
Examining data across countries and time, Becker and Woessmann found no consistent relationship between Protestantism (or any single religious tradition) and economic growth outside of northern Europe. What they did find was that the closer a country was to Protestant majority regions, the higher its literacy rates. In other words, the main factor boosting Protestant economies wasn’t a special moral code. It was the fact that more people could read, learn, and participate in an increasingly complex economy. Here, too, the deeper engine of prosperity was education, not religious identity per se.
The power of spreading knowledge
The story doesn’t end in Europe. Protestant missionaries spread their faith far and wide throughout the world, and their impact outside the West has produced some remarkable, if unexpected, economic results. Bai and Kung (2014) studied what happened in China during the late 19th century, a period marked by major missionary activity. Though only a small fraction of the Chinese population actually converted to Christianity, the regions where missionaries were most active saw real, measurable increases in prosperity.
Why? The authors found a striking pattern: every increase of one Protestant convert per 10,000 people corresponded to a nearly 19% increase in urbanisation rates—a widely used proxy for economic development. However, 90% of this effect could be explained not by personal religious transformation or a “work ethic,” but by knowledge diffusion. The missionaries established hundreds of schools and hospitals, spreading new knowledge and new public health practices—not religious doctrine per se.
In this case, it seems highly unlikely that either the Protestant “work ethic” or increased literacy among the small minority of converts could explain the broad-based economic impact. Instead, the data point to a story of institutional transformation: by establishing schools and hospitals, Protestant missionaries created a “stock of useful knowledge” that catalyzed modernization and economic growth. As with education in Europe, here it was the infrastructure and knowledge spillovers created by religious action—not the theology itself—that fostered prosperity.
Conclusion
The longstanding belief that faith brings material blessings is more complicated than it first appears. Max Weber’s classic theory tied Protestantism’s success to a distinct religious ethic, but subsequent research tells a subtler story. Across centuries and continents, religion most often fosters prosperity indirectly, where by encouraging education, spreading useful knowledge, or sometimes by promoting certain beliefs or values that foster individual economic success.
More often than not, the main drivers of national wealth are not simply religious ritual or fervor, but investments in human capital that allow people to flourish and economies to develop. Whether by accident or design, faith can help open the doors to prosperity, but rarely in the direct, mechanical way promised by sacred texts or simple cultural explanations.
So, does believing in God make countries rich? The answer is, like most questions in economics, a solid maybe? Direct faith alone rarely delivers prosperity. But when spiritual movements end up spreading literacy, opening hospitals, and building schools, they can lay powerful foundations for national wealth. Sometimes, a higher calling leads not only to devotion, but also to economic progress in this world. To the religious reader, perhaps you might find solace in unravelling the mysteries of how God works to create prosperity out of seemingly pure circumstances.
Acemoglu, D., & Robinson, J. A. (2012).Why Nations Fail: The Origins of Power, Prosperity, and Poverty. CrownBusiness.
Barro, R. J., & McCleary, R. M. (2003).Religion and Economic Growth across Countries. American Sociological Review,68(5), 760–781. https://doi.org/10.2307/1519761
Bai, Y., & Kung, J. K. S. (2014).Diffusing knowledge while spreading God's message: Protestantism and economicprosperity in China, 1840–1920. Journal of the European Economic Association,12(5), 1039–1070. https://doi.org/10.1111/jeea.12113
Becker, S. O., & Woessmann, L. (2009). WasWeber Wrong? A Human Capital Theory of Protestant Economic History. TheQuarterly Journal of Economics, 124(2), 531–596.https://doi.org/10.1162/qjec.2009.124.2.531
Weber, M. (1905/2002). The Protestant Ethic and the“Spirit” of Capitalism (S. Kalberg, Trans.). Blackwell Publishers. (Originalwork published 1905)