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ISLAMIC ECONOMIC CO-OPERATION – Book Sample

Contents – ISLAMIC ECONOMIC CO-OPERATION

• The Humanomic Structure of Islamic Economic
• Theory 1
• Technical Appendix 20
• Decision-making under Consensus: The Case of
• Economic Co-operation 23
• Critique and Alternatives to Contemporary
• Approaches in International Economic Co-operation 42
• The idea of Islamic Economic Co-operation in
• Contemporary Perspectives 66
• Technical Appendix 89
• Principles and Instruments of Islamic Economic
• Co-operation 94
• Resource Endowment and Allocation in Islamic
• Countries for Economic Co-operation 133
• Technical Appendix 151
• Appendix M. Anuar Adnan and M. Zainuddin Sa/eh 155
• Some Critical Issues in Development Financing for the
• Low- and Middle-Income Countries with a Special
• Reference to Selected Islamic Countries 159
• Technical Appendix 200

• Inter-Islamic Economic Co-operation and Integration: Institutions, Strategies and Obstacles Volker
• Appropriateness of the Basic Needs Approach to Regional Economic Co-operation among Islamic Countries 230
• Application of Optimal Debt Financing and Managed Intemational Trade Arrangements to Islamic Countries 248
• Privatisation of the Islamic Dinar as an Instrument for the Development of an Islamic Capital Market 272
• The Potential for Labour Mobility Between Islamic Countries as an Example of Islamic Economic
• Co-operation: the Case of the Arab Gulf Region in the 1980s 295
• Manpower Exchange and Social Security System for
• lslamic Economic Co-operation 316
• The Potential Impact of Islamic Economic Co-operation on the World Economy
• Volker Nienhaus and Masudul A. Choudhury 352

• Islamic Economic Co-operation in the South-South Context
• Conclusion 411
• Notes and References 420

Introduction

This book has three main objectives – to develop the idea of Islamic economic co-operation based on the principles of lslamic economic theory; to develop the analytics of the principles and instruments of Islamic economic co-operation; and to make a quantitative policy theoretic study of some important issues in Islamic development co-operation in contemporary times. in all of these areas a constant reference is made to the principles or implications of Islamic econ­omics.

Thus the study of Islamic economic co-operation is treated here as an application of Islamic economic principles to the area of international economics and economic development. While applying Islamic economic principles to the study of economic co-operation, a distinction is made between theory and thought, the emphasis here being on theory.

Consequently, where selected economic ideas, models and analyses are developed in this work, their relevance to fundamental sources alone is necessary, that is, to ‘Quran’, ‘Sunnah’ (traditions of Prophet Muhammed) and ‘Shariah’ (Islamic Law). Within this framework the intensely analytical, empirical and applied nature of economic co-operation in general is maintained.

The first main scope of this work, that is the development of the idea of Islamic economic co-operation based on the principles of Islamic economic theory, is served by delineating the ethico­economic structure of Islamic economic theory within the broader scope of a humanistic approach to the study of political economy. Since the topic of economic co-operation is an important part of international political economics, the humanistic elements of Islamic economic theory are shown to influence the study of Islamic econ­omic co-operation.

The focus here is not merely on lslamic inter­communal co-operation, but also on Islamic economic co-operation in the context of the South-South relationship and the North-South relationship. in this coverage of humanistic approach to the study of political economy, Islamic economic theory is shown to emanate from the general ethico-economic paradigm termed humanomics.

An introduction to humanomics is, therefore, relevant here. Hu­manomics can be considered as a branch of social economics that is devoted to ethico-economic inquiry in social theory and policy in world perspective. Upon this field of inquiry a scientific hasis is imparted by its goals, a set of consistency postulates and a unique methodology. in addition, the world community being the principal unit of its analysis, humanomics searches for universal truths that underlie a complex of social malaise, rather than for some temporal facts confronting only certain groups of people, nations and circum­stances.

The goal of humanomics is to discover the ethical foundations of socio-economic theory and, thereby, to develop a viable policy framework addressing critical socio-economic problems. Of interest to humanomics are truths that are common to ali religions, cultures and people of good will. They take the form of ethical values in preference to segmented religious, cultural and political overtones. They are values that promote co-operation among and within peo­ples. They are common values for the common good, for the found­ing of the ‘Good Society’.

Examples of such goals are equitable distribution of resources and opportunities in society; altruistic norms of consumption, production and distribution; social controls over the appropriateness of production; sharing of world resources which are seen as social as opposed to private goods, merit wants (serving elitist achievers) or purely public goods; the role of religious values in public choice theory.

Humanomics relies upon consistency postulates rather than on the neo-classical concept of economic rationality. These are postulates that tap ethical as well as purely economic values underlying social theory and policy. in fact, since the humanomic approach is based on the treatment of both economic and non-economic phenomena, it would be seriously restricted if the postulate of economic rationality alone was accepted perse.

The consistency criterion in humanomics is meant to show how the assumptions and analyses of a humanomic study are consistent with the stated ethico-economic goals of particu­lar investigations and how this can yield an ethico-economic frame­work of analysis.

in the search for means of developing a viable policy-theoretic framework of ethico-economic analysis, the methodology required must be wider than that used in economics. it must also yield quantitative or inferential answers. This analytical and empirical nature of humanomic studies makes the methodology of the social sciences a viable one to expand upon, so that the new methodology encompasses a scientific analysis of non-economic (that is, ethical) imponderables in socio-economic studies.

An example of a topic of humanomics is the reformulation of development criteria based on ethico-economic goals. in the after- matlı of attaining independence from colonial dominance after the Second World War, the developing countries found themselves in the grip of two opposing types of economic planning paradigms.

On the one hand, the intellectual colonial vestiges in developing countries stuck to the paradigm of economic growthmanship ac­quired from abstract models of the industrialised economies. This ‘led to the belief that models of economic growth designed for the more advanced countries should easily be applied to developing countries’.

However, the attempt to sway economic development programmes in this direction resulted in fiasco in the developing countries. it was found that although the esoteric mathematical models were made to fit the real world facts, the real world facts could not be attuned to the growth models. This was particularly true of the least developing countries (LLDCs), steeped as they were in serious problems of structural imbalances and paucity of statistical data to make the technical use of growth models of any worth.

On the other hand, a proposed mode of economic planning was based on policy-oriented approach to development. The principal actors in this were the international development organisations. They considered the great problem of the developing countries to be their structural imbalances. Among the types of developmental pro­grammes proposed by international and national development organisations were the basic needs programme, North-South rela­tions, and the long list of policy-theoretic contributions in the area of development with growth.

Through such innovative approaches the area of development economics broadened to include economic as well as non-economic dimensions of the socio-economic problems. Considerations of equitable distribution of incomes, wealth, resour­ces and opportunities for mitigating poverty and squalor, the indi­genisation of technology, self-reliant development, ethical concerns regarding problems of ecology, co-operation in the world and among nations, became some of the predominant issues.

The trickling-down postulate of economic growth was thus being replaced by the prin­ciples of economic efficiency and distributive equity. in this way the field of development economics showed signs of increasingly incor­porating an ethical and ameliorative approach as well as the socio­economic development of world communities.

The principle of sharing resources in the context both of national economies and of the world economy as a comerstone for develop­ment co-operation can be seen to be well-shaped in the crucible of ethics and values. in the analytical framework of humanomics it can