International trade, religion, and political freedom: an empirical investigation

This paper explores the impact of religion (Islam), culture, and political freedom on bilateral trade flows by employing an augmented version of the gravity model. A stratified global sample of thirty-three countries for the period 1996-99 is selected. Unlike past studies that used gravity models to estimate "separately" the impact of religion, culture, or language on trade in a categorised framework such as the Organization of Islamic Countries, this study investigates the effects of religion, culture, and political freedom in one model and within a global framework. After controlling for oil-exporting countries and regional trade arrangements, findings reveal that, on average, Muslim majority countries trade less than their Christian, Buddhist, or other counterparts. Results also reveal that countries with more political freedom and English language affiliation (a proxy for one aspect of culture) tend to trade more than the model predicts.