Islamic Perspective for Sustainable Financial System
Progress on Sustainable Development Goals in Muslim Majority CountriesSalman Ahmed Shaıkh, Mohammed Kabir Hassan
In the theoretical literature, the term ‘economic development’ has been interpreted differently in different time periods. In the post-World War II period, both the terms ‘economic growth’ and ‘economic development’ were used interchangeably. It was thought that economic wellbeing in material sense by virtue of increased overall production and income is enough to exhibit human well-being. The concept of income and wealth inequality was either overlooked or undermined. Then, the rising income inequality shifted the focus towards inclusive economic growth. In addition to that, the accelerated use of environmental resources to support economic growth raised concerns about environmental sustainability. Now, the term ‘sustainable and inclusive economic development’ encompasses the concept of inclusivity as well as environmental sustainability. This chapter explains that the aims of sustainable development are harmonious with the philosophy and institutions of Islamic finance. This chapter has two aims. First, it measures the performance of Muslim majority countries on sustainable development parameters. Second, it discusses how Islamic finance principles, institutions and instruments can assist in making progress towards meeting the goals of sustainable development. To achieve the first objective, this study establishes a novel index to measure the progress of Muslim majority countries on the 17 Sustainable Development Goals (SDGs). To achieve the second objective, this study outlines the Islamic approach to sustainable development through the Islamic value framework along with Islamic commercial finance and Islamic social finance institutions.