Economic Development- The Islamic Perspective

Economic development is one of the very important for the Islam, as they have to compete with their counter-parts in the world. However Islam does not encourage the unlimited and uncontrolled means of economic growth in the conventional economics. Thus, in this short article I would like to highlight the main ideas of economic development based on the Islamic perspective, according to Shari’ah.

In Islam, the concept of development centers around two broad aspects of its belief system - the Divine and the human- as also the relationship between them. It takes life as a whole and as part of its unitary view of the universe- it does not consider the material and moral aspects of the human existence as isolation of one from the other. The Islamic position of is that man was created to as the vicegerent, the trust keeper and the co-worker of God on the earth (2:29, 6:165, 8:27).

Islam is meant to serve the Devine Purpose of creation. Naturally, its attitude towards numerous methods concerning development- property rights, consumption and production patters, financial arrangements, income distribution, etc are much different from that of other socio-economic systems.


The philosophical foundation of Islamic approach to development are:

1. Tawhid: Allah’s unity and sovereignty
2. Rububiyah: divine arrangement for nourishment, sustenance and directing thing towards their perfection.
3. Khilafah: man’s role as Allah’s vicegerent on earth (trustees)
4. Tazkiyah: purification plus growth

The essential elements on the Islamic concepts of development are:

• It has a comprehensive character in the sense that it includes moral, spiritual and material aspects.
• The focus of development is man: development of man and his physical and socio-cultural development.
• Optimal utilization of resources and physical environment, their physical environment, their equitable use and distribution, and promotion of all the human relationship on the basis of Right and Justice.

Therefore, immense commitment of Islam to brotherhood and justice makes Falah (true well-being) of all human beings the principal goal of Islamic. Furthermore, moral development is a condition for economic development, not only material development. This is completely the opposite of the material and wealth driven capitalist economic development which takes no account to the moral development of the humans.

Islam does not allow economic development through illegal and prohibited ways in Shari’ah. These include: Riba (interest), Gharar (excessive uncertainty) and Maysir (gambling).

We can summarize the economic development in the Islamic Perspective as follows. Economic development will be taking place if and only if the following five conditions are satisfied along with an increase in the level of economic activity:

1. No one is left with his fundamental economic rights unfulfilled.
2. The economy’s moral, social and institutional fabric does not weaken.
3. Economic growth is combined by either constant distribution of income or a reduction in economic inequality in favour of the poorest.
4. The society does not deviate from its original Divine mandate.
5. The society maintains a credible deterrent against external aggression, keeping base with the ever-changing times.

Islamic economic system has clear objectives which are aiming for wide-range economic development. There are also Islamic modes of finance which are unique to Islam, where Adalah (justice) to all parties is maintained. Some of these modes of financing which promote the economic development in Islam include: Musharakah (partnership), Murabaha (cost-plus-profit sale), mudarabah (one finances and the other manages), Salam (sale on goods delivered in the future), Ijarah (lease) etc. All these method are based on profit-loss-sharing for the parties involved so that no one is exploited, and there is an equal distribution of wealth.

Islam also calls for the Muslims to pay Zakat and Sadaka, in order to distribute the income and wealth. Islam discourages concentration of wealth in few hands and ensures its circulation among all the sections of society. Al-Qur’an, the revealed book of Islam, says: “That which Allah giveth as spoil unto His messenger from the people of the townships, it is for Allah and His messenger and for the near of kin and the orphans and the needy and the wayfarer, that it become not a commodity between the rich among you.” (Al-Hashr 59:7). Our prophet (PBUH) has also encouraged us to work hard for the well-being of all the members of society and give alms to others.

Lastly, the Islamic government should be also committed to economic development and save-guard the well-being of all, according to the Islamic principles.

Islam also expedites the social drive toward production in its religious regulations. Under the Islamic economic system, earning is exclusively linked to working. All other means of earning and owner¬ship are abolished. The possession of natural resources is not considered legitimate without continuous human efforts to develop it. Any type of earning that does not require any human labour, in commerce as well as in production, is forbidden. For this reason, the use of financial capital to generate earning is abolished The only legitimate way to make use of capital is to invest it in production and share the risk of profit and loss. To insure the utilization of capital in economic develop¬ment, Islam strongly forbids the hoarding of money and initiates a yearly tax to downgrade any wealth that is not enrolled in the produc¬tion process. Additionally, any type of useless economic activities, such as gaming, magic and jugglery, are forbidden in Islam.

Furthermore, Islam makes it a requirement for Muslims to explore all fields of knowledge and seek any efficient means of production in order to utilize to maximum benefit the natural resources of the environment. The economic strength of Muslims is analogous to their military strength. The power of the Islamic State is judged on the merit of its economic progress and social prosperity. For this reason, Islam places a heavy emphasis on the role of political leadership to regulate social economic activities to enhance economic development and eliminate waste.