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This paper offers a novel illustration of the political economy of religion by examining the impact of religious elites on development. We compile a unique database on holy Muslim shrines across Pakistani Punjab and construct a historical panel of literacy spanning over a century (1901-2011). Using the 1977 military take-over as a universal shock that gave control over public goods to politicians, our difference-in-differences analysis shows that areas with a greater concentration of shrines experienced a substantially retarded growth in literacy after the coup. Our results suggest that the increase in average literacy rate would have been higher by 13% in the post-coup period in the absence of shrine influence. We directly address the selection concern that shrines might be situated in areas predisposed to lower literacy expansion. Finally, we argue that the coup devolved control over public goods to local politicians, and shrine elites, being more averse to education since it undermines their power, suppressed its expansion in shrine-dense areas.

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This chapter studies the role of religious elites in shaping the politics of development. It argues that the impact of Islam on economic development can be strongly conditioned by history and expressed through an interplay with formal institutional structures. Using insights from an ongoing project on the political economy of shrines in Pakistan (Malik and Mirza 2018), we show how regions with a greater presence of historically significant Muslim shrines experienced a more retarded growth of literacy after General Zia-ul-Haq’s military coup in 1977. These empirical patterns are explained by the historical aversion of shrine-based religious elites to education and their greater ability to suppress education in the wake of the 1977 military coup, which brought shrine elites to greater political prominence and gave elected politicians direct control over public goods provision. The chapter concludes by discussing the entry and persistence of shrine elites in electoral politics and drawing out its implications for the study of Islam and development.