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Examining Theories of Growth & Development & Policy Response Based on Them from Islamic Perspective


  • Shaikh, Salman


Poverty and inequality around the world has been rising over the last three decades and the attainment of the Millennium Development Goals (MDGs) seems a far fetched goal. In explaining underdevelopment, Classical Economics has offered many theories and models including but not limited to Rostow’s Stages of Growth Theory, Harrod-Domar Model, Solow’s Growth Model, Dependency Theory, Lewis Two Sector Model, Neo-colonial Dependence Model, False-Paradigm Model, and Dualistic-Development Thesis etc. This study analyzes the theories of development proposed in classical literature in the light of Islamic Economics and investigates whether policy response influenced by some of these theories had been effective or not in selected countries and regions. In light of recent developments in growth literature, the last section of the paper also analyzes whether Islamic economics principles have the capacity to ensure that determinants of growth suggested by ‘new growth theory’ will exist in an Islamic economy and together with these, do Islamic economic principles have other distinctive mechanisms and institutions that can help in the development process.

Suggested Citation

  • Shaikh, Salman, 2012. "Examining Theories of Growth & Development & Policy Response Based on Them from Islamic Perspective," MPRA Paper 38530, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38530

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    References listed on IDEAS

    1. Dani Rodrik, 2010. "Diagnostics before Prescription," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 33-44, Summer.
    2. Chang, Ha-Joon, 2006. "Understanding the Relationship between Institutions and Economic Development: Some Key Theoretical Issues," WIDER Working Paper Series DP2006/05, World Institute for Development Economic Research (UNU-WIDER).
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    More about this item


    Interest free economy; Public finance; Taxation; Inequality; Income redistribution; Islamic economic system; fiscal policy; deficit financing;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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