Publication Date
11-1-2007
Description
Most of the attention on Islamic finance has so far been focused on the regulatory framework, products and services offered, comparability with conventional finance, risk management characteristics, Shariah compliance, and expansion and penetration issues. Very little work has been done to explore the unique features of Islamic finance for the larger good of the society particularly in the context of economic growth and poverty alleviation. I would argue this morning that Islamic finance can be a powerful tool for inclusive growth and amelioration of the conditions of poor in the Muslim countries. Let me clarify at the outset as to what is meant by inclusive growth. Economic growth can either be broad based in which the benefits are shared widely and particularly by the bottom quintile of the population or highly skewed where the benefits accrue disproportionately to a small elite group of society. Income generation, asset creation, human capital formation and access to public services are some of the tested ways through which shared or inclusive growth can be achieved. The most successful example of shared or inclusive growth model is the experience of East Asia in the last half of the 20th century. The predominant economic model of the day is the Capitalist model that has made impressive strides in improving the living standards of the nations across the world. Capitalist model relies on private property rights and the markets for efficient allocation of resources and does a fairly good job in generating high growth rates and lifting millions out of poverty. But it fails in ensuring an equitable distribution of incomes or benefits from growth. It must also be clarified that growth can help alleviate poverty but does not necessarily reduce income inequalities. The pattern of growth therefore becomes critical. The choice of strategies and public policies determines whether pro-poor growth can also reduce inequalities.
Recommended Citation
Husain, I. (2007). Islamic Finance, Inclusive Growth, and Poverty Alleviation. Retrieved from https://ir.iba.edu.pk/faculty-research-talks-speeches/59
Notes
Keynote address delivered at the 3rd Annual International Conference on Islamic Banking on ih November 2007 arranged by Islamic Capital Partner, Karachi