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Does Islam Meet the Challenge of Economic Development in the Muslim World? (Islamic
\nvs. Secular Arguments)
\nA very small number of countries in the Muslim world are classified as rich, such as
\nthe Arab Gulf countries, or enjoying a relatively high level of industrialization, such as
\nTurkey and Malaysia. Apart from these exceptions, the Muslim World is generally
\nsuffering from underdevelopment and poverty.
\nMuslims make up about 19 percent of the world\u2019s population but earn only 6
\npercent of its income. Underdevelopment means structural disequilibrium mostly
\nreflected, in high dependence on agricultural products, raw material or mineral
\nproduction, and lack of developed industrial structure. Such structural disequilibrium is
\nnoticed even in the few rich Muslim countries. Add to this, poor social infrastructure, i.e.
\neducation, health, sanitations, clean water, etc.
\nMal distributions of National income, poverty, or ultra-poverty, of high percentage
\nof population are common problems in the Muslim World. Development problems are
\nreflected in low income per capita, and unsuitable annual rates of income growth, weak
\nexport performance, and unfavorable terms of trade, BOP problems, depreciating foreign
\nvalue of national currencies, high and increasing foreign indebtedness.
\nTraditionally Economic analysts in international development reports attribute the
\neconomic problems of Muslim countries to same factors that are known in other
\ndeveloping countries, such as: inefficient financial markets reflecting on use of financial
\nresources, low rates of savings and investment, idle or underdeveloped natural resources,
\nlow rate of technological advance, high rates of population growth, inability and failure to
\ncarry out sound fiscal, monetary, and trade policies.
\nIn the recent two decades economists started to recognize that most of the
\neconomic problems which developing countries faced, and still facing are backed by
\nunfavorable socio\/political climate ( e.g. lack of education, lack of development vision and
\n2
\naspiration, political instability, and corruption) as well poor or inefficient organization,
\nsuitable legislations, and law enforcement.
\nIn this lecture, I am reviewing and discussing some arguments that have been
\nraised recently about ability of Muslim countries to develop mainly because of their
\nreligious culture.
\nM. Noland (2003) recognized that a relationship can be found between adherence
\nto major world religions (Christianity, Islam and Buddhism) and national economic
\nperformance. Yet he enquired about how far strong or significant such relationship can be
\non statistical grounds? M. Noland assigned a special section1
\nin his work to Islam, saying
\n\u201csince considerable recent commentary has focused on (its) alleged impact\u201d. M. Noland
\non bases of his empirical work could not support a hypothesis that Islam strongly affects
\neconomic development, but at same time he refused claims of some commentators who
\n\u201chave claimed that Islam is inimical to growth\u201d.
\nLuigi Guiso, Paola Sapienza, and Luigi Zingales (2003) found that \u201con average,
\nreligious beliefs are associated with \u201cgood\u201d economic attitudes, where \u201cgood\u201d is defined
\nas conducive to higher per capita income and growth\u201d. Yet, Luigi Guiso et al, concluded
\nfrom their empirical work that while Christians (particularly Catholics) are thrifty, favor
\nprivate property and competition, Muslims and Hindus are strongly against competition.
\nMuslims, they say, are the most anti-market, as they were generally less disposed to agree
\nwith statements such as \u201cCompetition is good,\u201d and \u201cPrivate ownership of businesses and
\nindustry should be increased\u201d. They concluded that on average \u201cChristian religions are
\nmore positively associated with attitudes conducive to economic growth, while Islam is
\nnegatively associated\u201d.
\nThe econometric approach adopted by M. Noland, Guiso, et al, and others2 which
\ndepended on \u201cavailable statistical data\u201d has not in fact been fair to Islam. Apart from all<\/p>\n
1
\n) This issue is addressed in the fifth section of M.Noland\u2019s paper
\n2
\n) See; Daniel L. Chen, \u201cEconomic Distress and Religious Intensity: Evidence from Islamic Resurgence During
\nthe Indonesian Financial Crisis\u201d, MIT mimeo, November 2003; Karen Pfeifer, \u201c Islamic business and business
\n3
\nprobable bias of samples\u2019 population, available data still reflects properties of
\ncontemporary Muslims. These may be good Muslims (so far practicing of prayers, fasting,
\netc.) or may not. Besides, many Contemporary Muslims have minor education about
\nIslamic culture, especially its economic aspect. Modern Muslim societies are not ruled by
\nSharia. Thus, answers by Muslims on questions about relationship between their religion
\nand modern practices of business and markets, as collected by samples are bound to be
\ninaccurate and have to be examined by Muslim experts.
\nD. Landes explained stagnation in the Muslim world because, in his opinion, of
\ndeveloping an inferiority complex. He added \u201cIslam has long exercised a retardative
\ninfluence on Arab intellectual and scientific activity\u201d as \u201cnew knowledge and ideas have
\nfallen under suspicion as bid\u2019a or heresy.\u201d Some truth, however, can be detected in D.
\nlands\u2019 talk about bid\u2019a ( \u0627\u0644\u0628\u062f\u0639\u0629 (and its retardative impact. Surely, some Muslims\u2019 opinions
\non bid\u2019a were behind inability to innovate or to qualify market rules to suit continuous
\nchanges.
\nD. Landes\u2019 conclusion that \u201cIslam has long exercised a retardative influence on
\nArab intellectual and scientific activity,\u201d is unacceptable because this is not Islam, it is
\nrather culture that developed in Muslim countries because of diverse factors that have to
\nbe thoroughly analyzed.
\nB. Lewis refers to lack of freedom in Muslim societies and failure of leadership.
\n\u201cMuslim modernizers, by reform or revolution, concentrated their efforts in three main
\nareas: military, economic, and political and results achieved were disappointing. B. Lewis
\nemphasizes that \u201clack of freedom\u201d was a major force in retarding the development of the
\nMuslim world. To quote his words \u201cfreedom of the mind from constraint and
\nindoctrination, to question and inquire and speak; freedom of the economy from corrupt
\nand pervasive mismanagement; freedom of women from male oppression; freedom of
\ncitizens from tyranny, that underlies so many of the troubles of the Muslim world.<\/p>\n
as usual: A study of firms in Egypt\u201d, Development in Practice 02\/2001; 11(1):20-33. DOI:
\n10.1080\/109614520020019920
\n4
\nOne would tend to agree with B. Lewis on some important points, but going
\nthrough his analyzes we find that he has underestimated the devastating effects and
\nconsequences of European imperialism to the Muslim world.
\nAbout importance of \u201cFreedom\u201d in B. Lewis\u2019 thesis, we have to emphasize that the
\nQuran contains many versus which speaks to non-believers asking them to think and use
\ntheir intellect for sake of adopting the righteous path. Prophet Muhammad Pbuh, strictly
\nfollowed the Quranic teaching, emphasizing the value of human liberty and man-kind
\nequality. Omar Ibn Al-Khatab confirms that all people are born free by will of Allah and Ali
\nIbn Abi-Taleb \u201chas repeatedly emphasized that God created man as a free being with
\nsound senses and reason, and led him with His grace to the right path, but it was man who
\nchained himself with false desires and misguided ambitions\u201d Limits on freedom in the
\nMuslim world are imposed by tyrant rulers, vested interest groups, unlearned religious
\nauthorities, and some preachers who use their followers to enforce their opinions on
\nothers. Unfortunately, Islam is accused of stifling freedom if the unfounded fatwas or
\nintolerant religious opinions are considered part of Sharia. Yet, more serious in stifling the
\nfreedom of Muslim people in recent centuries was western imperialism.
\nThe French imperialists in the 19th and 20th centuries moved by their nationalistic
\nand Christian zeal saved no effort in challenging and weakening the Islamic culture in
\nAlgeria and Morocco and other Muslim territories in Africa. British imperialists mainly
\nmotivated by their economic interests were keen to firmly establish the interest-based
\nbanking system, as well as secular taxation system. Trade links between colonies and the
\nempire planted inequality in benefits and created later on a pattern of economic
\ndependency that was unfavorable to the colonies even after independence. Would B.
\nLewis say that the western imperialists did all that by consent of Muslim people? In fact all
\nthat could not had been without firmly closing the Freedom\u2019s door.
\nImperialism had strongly polluted culture in Muslim societies in a manner and
\ncaused damage which could not be easily repaired later on. The effect of western
\n5
\nimperialism on education was even worse, as students of the high class and later on the
\nmiddle-class, were studying Western culture, while minor attention was given to modern
\nempirical sciences and technology.
\nB. Lewis also underestimated the effect of establishing the new state of Israel on
\nthe Arab world in 1948.Brotherhood and unity of the Muslim people is emphasized in
\nQuran, and the Arabs woke up on the disaster of their brothers in Palestine losing their
\nland becoming refugees everywhere? The Muslim economies in the Arab world, in
\nparticular the Egyptian economy, suffered since 1948 because of Israel more than
\nanything else. How far that was due to attempts to restore a land for its Muslim people
\n(Islamic cause) or to politics, or due to unsuccessful militarist rulers\u2019 adventures? B. Lewis
\nshould have given us some answer instead of emphasizing the humiliating defeat of the
\nMuslims by Israeli gangs in 1948.
\nTimur Kuran\u2019 s argued that some Sharia rules are not conducive to economic
\ndevelopment. Islamic Partnership contracts enabled merchants to raise money for long
\ndistance trade expeditions in the past, but they are \u201cill-suited to building long-lasting
\nassets such as factories and railways\u201d. T. Koran holds business partnership complying with
\nSharia was behind failure of Muslim countries (referring particularly to the Middle East) to
\n\u201cproduce a single case of mass financial mobilization through non-governmental channels
\nfor a major business venture, except insofar as foreigners were involved\u201d. His recent
\nwritings emphasized other obstacles to progress that are related to Sharia; the financial
\nsystem, inheritance practices, Waqf, contract law and procedures of the courts.
\nDoes T. Kuran know that Partnership and other finance or trade contracts which
\nhad been practiced for centuries in Muslim societies were known in the pre-Islamic
\nsociety? These contracts were approved in Sunnah under conditions that eliminated
\nusury, Gharar, Ghab\u2019n and other forms of injustice. If T. Kuran knows that such
\npartnership \u201ccontracts\u201d are not mentioned in the Quran, then he may have to blame
\nMuslim scholars for not updating Islam to coup with new matters that have no previous
\nrules in Sharia or in approved traditions of the Muslim world. Similarly, when T. Kuran
\n6
\n(2003) identifies the absence in Islamic law of the concept of a corporation as one of the
\nbottlenecks which seriously hampered economic growth in the Muslim world, he should
\nknow that the traditional unlimited liability partnership was not in the Divine revelation.
\nThe concept of corporation with its limited liability character was adopted in Islamic Fiqh
\nafter it has been recognized as maslaha rajeha (Muslim people\u2019 public interest) in the
\n1980e s. Again T. Kuran could have said that ijtehad in this respect came almost one
\ncentury after the western world. But even so, it is false to say that the absence of the
\nconcept was crippling Muslim countries\u2019 economic growth. This is simply because the
\n\u201ccorporation\u201d was legalized by secular laws in many Muslim countries during European
\nimperialism. Similarly, neither T.Kuran nor anyone else can that the prohibition of interest
\nwas behind the present state of un-development of the Muslim world because the
\ninterest system, and commercial banks were made legal by secular laws. What gains have
\nbeen obtained since the 19th century from adopting such Sharia impermissible system?
\nWhat benefits in terms of economic growth have been gained from interest-based
\nCommercial banking and commercial Insurance in Muslim countries since these were
\nmade legal by secular laws?
\nT. Kuran bluntly calls these divine Laws \u201cInheritance customs\u201d saying that these
\ncustoms \u201chindered business consolidation\u201d. Because these laws cause wealth
\nfragmentation! First, T.Kuran should have brought hard empirical evidence that Islamic
\ninheritance laws cripple capital accumulation before claiming or suggesting this. Second
\nwe have to tell him that Justice in wealth distribution is given high priority in the Islamic
\nsystem, and Islamic inheritance laws are playing an important role in this respect.
\nOn other front, T. Kuran is right in attacking the Waqf institution in being
\nstagnating or corrupted in some Muslim countries. But why, on the other side could not
\nhe recognize the new role played by such institution in many modern Muslim countries,
\nsuch as Kuwait, Saudi Arabia, Sudan and Pakistan.<\/p>\n
Most of the arguments that raises suspicion regards the inability of Islam to help
\neconomic growth mix between Islam and Muslims, i.e. how contemporary Muslims think,
\n7
\nbehave, act, and how their social and political life is run in their countries. In other words,
\nMuslim countries are taken literally to represent Islam. The question of \u201cIs Islam capable
\nof meeting the challenge of economic development?\u201d becomes synonymous with \u201cIs the
\nMuslim World within known conditions capable of meeting the challenge of economic
\ndevelopment?\u201d
\nSuch approach is methodologically wrong because of the wide gap which exists
\nbetween an authentic Islamic Model and its application. Such wrong methodology
\nprevents non-Muslim scholars from making any rigorous analysis about the \u201cIs Islam
\ncapable of meeting the challenge of economic development?\u201d
\nMany of the Islamic economists recognize that their societies, for centuries have
\nsuffered from stagnation and lack of enlightened Islamic rules in the areas of economics
\nand finance in particular. Imperialism had inflected badly and seriously on their countries
\nby introducing foreign education and secular legislations which allowed for interest-based
\nfinancial institutions (Riba System), secular taxations (neglecting Zakat).
\nMost of the Muslim countries after independence were plagued by dictatorship,
\ncorruption, and market monopoly! More important, is some prevailing misunderstanding
\nabout innovation in Islam. Some traditional fuqaha consider any innovation to be bid\u2019a
\n\u0628\u062f\u0639\u0629 , while some others widen the scope of innovation without deep knowledge in Sharia
\nand its tenets (maqasid). In fact enlightened ijtehad is the solution, and this needs an
\natmosphere of freedom in Muslim societies. A \u201cu\u201d turn is necessary to restore true
\ncivilization to the Muslim world by Sharia revival. This is the big challenge which Islamic
\neconomics face!
\nAcknowledgements: This public lecture was convened by Dr. S. Nazim Ali, Bahnaz AlQuradaghi, and Wijdan Tariq of the Center for Islamic Economics and Finance, College of
\nIslamic Studies, Hamad Bin Khalifa University in Doha, Qatar.
\n8
\nSpeaker Bio: Abdelrahman Yousri Ahmad is Professor of Islamic Finance, College of Islamic
\nStudies, Hamad Bin Khalifa University. He holds a Ph.D. in Economics from St. Andrews
\nUniversity, Scotland. His past experience include as ex- chair of the Department of
\nEconomics at Alexandria University and Director-General, International Institute of Islamic
\nEconomics at the International Islamic University, Islamabad, Pakistan. He authored
\nnumerous books and articles. He is a recipient of the Islamic Development Bank Prize for
\nhis outstanding contribution to Islamic economics. He is also holding permanently the post
\nof \u201cEmeritus Professor\u201d at the newly established Faculty of Economic Studies and Political
\nScience, Alexandria University.<\/p>\n
Link : https:\/\/ibir-api.hbku.edu.qa\/sites\/default\/files\/2020-12\/Abdelrahman%20Yousri%20-%20Summary%20Report.pdf<\/p>\n","protected":false},"excerpt":{"rendered":"
Does Islam Meet the Challenge of Economic Development in the Muslim World? (Islamic vs. Secular Arguments) A very small number of countries in the Muslim world are classified as rich, such as the Arab Gulf countries, or enjoying a relatively high level of industrialization, such as Turkey and Malaysia. Apart from these exceptions, the …<\/p>\n","protected":false},"author":1,"featured_media":3288,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[47],"tags":[],"class_list":["post-3287","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-studies"],"yoast_head":"\n