MACMILLAN An Islamic Model for Stabilization and Growth (Political Economy of Islam)

This book argues that the macroeconomic policy adjustment models recommended by the IMF and the World Bank for implementation in many Muslim countries, with substantial donor financial support, have not been effective. Economic indicators show low economic growth, persistent fiscal and external deficits and limited industrialization. Also, these countries are experiencing increases in unemployment, poverty and substantial growth in income and wealth inequalities. These facts underline an urgent need to produce an alternative to the failed conventional macroeconomic model in order to address the challenge of macroeconomic and social adjustment policies. The project posits and investigates the idea that the Islamic economic model prescribed in the Quran and applied by the Prophet (sawa) could be the ideal model for Muslim as well as non-Muslim countries. Review Dr. Adama Dieye has written a remarkable and timely book at a juncture of potentially devastating crises. Economies are suffering from instabilities resulting from, inter alia, high indebtedness, forced austerity, supply chain disruptions, massive inequalities of income and wealth, political turmoil and conflicts, heightened levels of risk and uncertainty, and by environmental crisis posing existential threat to humanity. The fundamental question addressed in the valuable effort of Dr Dieye is: Given that the conventional adjustment and stabilization programs have mostly failed, are there effective alternative stabilization models that could restore stability to economies, destabilized by internal and external shocks, more rapidly, sustainably, and at lower costs than the conventional paradigm? His equally essential answer, based on theory and empirics, is to adopt a risk-sharing approach to stabilization rather than the conventional paradigm of shifting or transferring risks of policy adjustments. The many interesting and useful theoretical and empirical features make this book a valuable contribution to the field of economic policy making. It is among the first successful efforts in investigating the empirical implications of a paradigm whose theoretical consideration began a few decades ago. For all these reasons, policy makers, students of economics and finance, researchers and analysts would be remiss in not availing themselves of this highly relevant and unique work that proposes an effective solution to a serious problem that has been plaguing developing and emerging market economies -Abbas Mirakhor is the First Holder of INCEIF’s Chair in Islamic Finance at INCEIF- The Global University of Islamic Finance. He was The Executive Director and Dean of the Executive Board at of the International Monetary Fund From the Back Cover This book argues that the macroeconomic policy adjustment models recommended by the IMF and the World Bank for implementation in many Muslim countries, with substantial donor financial support, have not been effective. Economic indicators show low economic growth, persistent fiscal and external deficits and limited industrialization. Also, these countries are experiencing increases in unemployment, poverty and substantial growth in income and wealth inequalities. These facts underline an urgent need to produce an alternative to the failed conventional macroeconomic model in order to address the challenge of macroeconomic and social adjustment policies. The project posits and investigates the idea that the Islamic economic model prescribed in the Quran and applied by the Prophet (sawa) could be the ideal model for Muslim as well as non-Muslim countries. Adama Dieye is former Director of Department of the Central Bank of West African States (BCEAO), Senegal. About the Author Adama Dieye is former Director of Department of the Central Bank of West African States (BCEAO), Senegal.