Abstract
This thesis explores the effects of religious discrimination on bilateral trade. Religion has permeated most societies throughout time, and this is not the first research to suggest that religious factors might have an impact on trade. However, where other papers have taken more of an interest in shared religious characteristics across countries and how these affect trade flows, this paper seeks to answer if suppressing religions also matters. I estimate this effect by employing the gravity model of international trade and augmenting it to include a measure of religious discrimination. The empirical results are found by performing regressions using Poisson pseudo maximum likelihood estimation. The estimation is specified with different forms of fixed effects to control for unobserved heterogeneity. Furthermore, I test if the impact differs depending on which religion is discriminated against. I also check if the terrorist attack of the 11th of September affected the explanatory power of religious discrimination on trade. The findings indicate that the expected trade flow between two countries is reduced when a country discriminates against a religion which has a presence in the other country. The effect depends both on how severe the degree of discrimination is, and how large the share of people who adhere to the religion is in the other country. Additionally, discrimination against Muslims and Christians in particular reduces the predicted trade flow between two countries. For both discrimination in general, and for discrimination against Christians and Muslims specifically, the negative effects are stronger if the exporting country is the discriminating party. An interaction analysis on the impact of 9/11 however does not yield much in terms of significant effects on discrimination and trade.