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Challenges to the Development of an Islamic Economic System

Noha Farrag () and Hebatallah Ghoneim ()
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Noha Farrag: Canadian International College

No 42, Working Papers from The German University in Cairo, Faculty of Management Technology

Abstract: The disappointment with the failure of the capitalist and socialist economic systems in solving the development problems of many countries has led several scholars to inves-tigate the Islamic Economic System (IES) as an alternative. Nienhaus (2010) describes the IES as a system that has the potential to capture the dynamism of capitalism and the equality of socialism. This paper contributes to the literature by identifying the pillars of an IES in conformity with the basic features that identify other economic systems. The paper aims at emphasizing the challenges that may arise in association with every pillar of this system to propel an Islamic economy forward in the modern world. The paper explores the challenges associated with ownership, economic decision making, incentives, and the role of the government in an Islamic framework. Accordingly, this study highlights that attaining a balanced demeanor, continuous assessment and inno-vation of financial instruments, employing spiritual incentives, institutional reform, and fighting Islamophobia are key challenges to the implementation of an IES.

Keywords: Islamic Economics; Economic System; Ethical Economics; Islamic Governance; In-centives; Motivation; Waqf; Decision Making; ownership; role of the government; Um-mah; Islamophobia. (search for similar items in EconPapers)
JEL-codes: H10 P40 P48 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2016-05
New Economics Papers: this item is included in nep-hme
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