Do Countries Need Religious and Educational Freedoms to Achieve Prosperity?

This study examines the impact of religious and educational freedoms on prosperity. The system GMM model is applied by using the data of 45 lower-, middle-, and high-income countries from 2009 to 2018. The results show that religious and academic freedoms are positively and statistically significantly associated with prosperity. It is revealed from the results that the lagged impact of both religious and education freedoms has a higher impact on prosperity than the current level of both variables. Interestingly, the interaction term between academic and religious freedom is also positive and statistically significant, indicating that their combined effect further increases prosperity. Further, the interaction term between government effectiveness and gross fixed capital formation is introduced. Its impact is positive and significant, indicating that capital investment positively affects prosperity in the case of higher government effectiveness. This study uses gross fixed capital formation and trade openness as control variables and these variables have a positive impact on prosperity, but the impact of trade openness on prosperity is insignificant. Thus, this study recommends religious and education freedom to achieve prosperity, especially in low-income countries that are already lagging.