The Future of Asia: Forces of Change and Potential Surprises – Supplementary Report

Policy Horizons | Horizons de politiques May 1, 2014

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The Rise of Fundamentalism as a Constraint to Economic Development

What is it?

Religious fundamentalism is increasing across several Asian nations, posing threats to national economic development. Failed states characterized by social, political and economic failures such as Afghanistan and Pakistan are not the only Asian countries affected by fundamentalism. Although other tensions have a more local reach, religious fundamentalism is present in Bangladesh,¹ the Maldives,² Indonesia,³ Thailand,⁴ Malaysia,⁵ the Philippines,⁶ India,⁷ Nepal, Sri Lanka⁸and Myanmar.⁹ For example, Muslim-Buddhist clashes in Myanmar, and Muslim-Hindu-Buddhist tensions in Sri Lanka, continue to pull the countries down and slow their economic development.¹⁰

The cause of religious fundamentalism is not necessarily linked to poverty. Political ideologies, the uprooting of traditional ways of living through rapid urbanization ¹¹ and even the highly educated class (as evidenced in Bangladesh) may also contribute to its development. These factors, especially ones relating to the fast modernization of societies, may indicate that the trend will continue in the future.

At the same time, the form and scope of fundamentalist activity has been evolving. Prior to September 11, 2001, the focus of terrorist groups included investment in large-scale operations and international targets. However, since 9/11, counter-terrorist responses have resulted in organizational fragmentation, hindering the ability of these groups to implement large-scale attacks. As a result, terrorist operations have become more localized, with religious minorities and local authorities frequently targeted.¹² This form of local fundamentalism and terrorism is a common source of instability across Asia.

Why is it important?

Although estimating the cost of religious fundamentalism is very challenging, it can negatively impact health, culture and economic output. It has the potential to cause international alienation and large population displacements, as well as incubation of criminal activity, destabilization of national budgets, increased debt, and excessive reliance on foreign aid.¹³ Countries bogged down by religious fundamentalism and the costs of response (i.e., counter-terrorism, law enforcement) tend to have a lower GDP, Purchasing Power Parity, and rank on the Human Development Index. These countries generally have fewer fundamental freedoms, women’s¹⁴ ¹⁵ and children’s rights and less personal mobility. As a result, rising fundamentalism has the capacity to undermine economic growth and development in otherwise economically healthy countries in Asia.