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Islamic Economics

Islamic Economics Syllabus for M.A. Economics

Islamic Economics  (Paper 5) M.A. Economics Part-I

The main objective of this course is to acquaint students with the economic aspects of Islamic principles and their application to analyze contemporary economic problems. The course helps to build nexus between the Islamic principles and mainstream economic theories. The topics covered in this course range from microeconomic to macroeconomic concepts pertaining to fundamentals of Islamic thoughts. It focuses on, among others, the contributions in development economics of Abu Yousaf to debate on good governance and functioning of market system of Ibn-e-Khuldon. Major topics in this course are Islamic models of finance, banking systems, welfare and distribution of income, zakat and social justice, and current process of Islamization of economic system in Pakistan.

Prerequisite for this course is basic knowledge of holy Qura’an, Hadith, Shariah and economic theory.

Note: The instructor concerned may assign additional and latest literature on the subject matter. The references provided  at the end of the course are just helping literature. Students must consult additional literature on each topic.

Topic 1:                Introduction:  Islamic Economics

  • Nature, and Importance of Islamic Economics. Islamic Economics Versus Economics of Secular Economy and Mixed Economic
  • Brief Introduction of Basic Values of Islam; Taqva, Halal and Haram, Justice, Benevolence, Equality, Brotherhood and Cooperation as Determinants of Economic Behaviour and

Topic 2:                Major Economic Thoughts:  Contribution of Scholars

  • Contribution of some Earlier Muslim Scholars in the Development of Islamic Economics (Imam Abu Yousuf, Imam Abu Ubaid Al Qasim,, Ibn-e-Khaldoon, Imam Ibn-e-Taimiah, Shah Waliullah Dehlvi, Baqar-al-Sadar).

Topic 3:                Islamic Economic System

  • Silent features of Islamic Economic System; objectives, Economic Freedom, Property and Ownership Rights.
  • The Concept of Equality and Efficiency.
  • The Relative Importance of Capital and Labour.  Priority to Basic Needs.
  • Concepts of Ownerships and Implication.  Welfare and Income Distribution.
  • Comparison of Islamic Economic System with Capitalism and Socialism, with respect to the above cited principles/values of Islam.

Topic 4:                Microeconomics in Islamic Framework

  • The Consumer Behaviour in Islam. Utility, Moderation, optional Consumption Behaviour.
  • Organization of Production and Behavioural Theories of Firms.
  • Objectives  and  Behaviour  of  Firm  in Islamic Economy.   Business Ethics in Production and Marketing.  Hoarding and Gains.
  • Market Structure – Monopoly and Competition, Resource Allocation in Islamic Environment and Cartels. Concepts of Fair Trade.
  • Stockists / Wholesales, determination of Prices and Rate of Normal Profit / Meeting of Losses.  Price Mechanism and State Role in Regulation of Markets.

Topic 5:                The Modes of Financing In Islam

  • Modarba and Musharka
  • Types of Bai. (Bai-Salam, Bai Muajjal, Morabaha.)
  • Saving and Investment in Islam.  Investment of Savings for Gains.

Topic 6:                Distribution in Islamic Economy

  • Islamic Stress on Circulating of Wealth.
  • Steps against Concentration of Wealth.
  • Social Justice in Islam. Rights of Labour, Distributive Justice
  • Use of Land and Other Natural Resources and their Rewards. Role of State in Distribution of Wealth.

Topic 7:                Some Basic Macroeconomic Concepts

  • Consumption, saving and Investment Functions in Islamic Environment.
  • Determents of Islamic Consumption Function, Concept to Help others, Welfare and Religious believes.
  • Zakat and Usher.

Topic 8:                Demand and Supply of Money and Banking

  • Gold Money, Paper Money and Credit Money.
  • Western Justification of interest.
  • Islamic Concept of Riba, its Implications and Alternatives.
  • Functions of Commercial Banks in Islamic Framework.
  • Central Banking and Monetary Policy in Islamic Framework.
  • Central Banking and Monetary Policy in Islam.
  • Inflation Vs. Design of Capital Market.
  • Monetary Policy in an Islamic Framework.

Topic 9:                Zakat, Social Justice and State

  • Meaning of Zakat, Nisab, Introductory Hints about items of Zakat.
  • Distributive Role of Zakat and Social Justice.
  • Zakat as a tool in Fiscal Policy.
  • Economic Role of Islamic State.
  • Welfare consumption and limits.
  • Revenue and Expenditure Items in Modern Islamic States.
  • Beneficiaries of Zakat.
  • The Tax Policy of Islam. Nature and Scope of Fiscal Policy in Islamic State (Taxation Policy).
  • Expenditure Principles.  Burden of Taxes.

Topic 10:              Economic Planning and Development

  • Concepts and Objectives of Economic Development in Islam.
  • Resources for Development.
  • Nature of Economic Planning in Islam.

Topic 11:              The Islamisation Process In Pakistan

  • The Islamisation  of Banks.
  • Implementation of Zakat / Usher in Pakistan.
  • A brief Survey of Changes in Economic Structure and Conditions Since the Holy Prophet (regarding Transport / communication, Business Forms, Production of Goods, Money and Banking).

Topic 12:              New Emerging Issues and Challenges

  • Current Situation and Proposed Changes.
  • Islamic View of  International Economic Institutions and Modes of International Cooperation.
  • Islamic View of Globalization. Quality Identification of Goods, Merits and Trade.
  • Fair Prices Vs. Market Price etc.

Books Recommended:

 Basic Texts:

  1. Islamic Economics:  Theory  and  Practice,    A  Comparatice  Study,    A.  Mannan, Cambridge, Hodder and Stoughton, 1986 (or latest ed.)
  2. Islamic Economics: Dar A.H & M.. Akram Ilmi Kitab Khana, Lahore (latest )
  3. Macro Consumption Function in an Islamic Economic Framework, M. Fahim Khan, International Centre for Research In Islamic Economics, King Abdual Aziz Univ,


  1. Ahmad, Khurshid,  (latest  edition),  Fiscal  Policy  and  Revenue  Allocation  in  Islam, International Islamic University,
  2. Anf A.Q. Mannan M.A. (1995), Developing a System of Financial Instruments IRTI, Islamic Development Bank,
  3. Badawi, Imam Abu Abaid Al-Qasim Muhammad A. Zaki, Kitab ul Amwal: , Zakat and Social Justice, Islamic Council of Europe, London,
  1. Chapra T M., The Economic System of Islam,  University of Karachi,
  2. Chapra, Umer,  Monetary  Policy  in  an  Islamic Economy, in   Money  and Banking in Islam, Institute of Policy Studies,
  3. Ghazanfar S.M., (2003), Medieval Islamic Economic Thoughts, Routledge
  4. Khan M. Fahim, (1995), Human Resource Mobilization Through the Profit, Loss Sharing Based Financial System, IRTI, Islamic Development Bank
  5. Khan, Tariq ullah, (1996), Practice and Performance of Mudarba, A case study of Pakistan, IRTI, Islamic Development Bank,
  6. Khurshid, Ahmad,  Elimination of Riba:  Institute of Policy Studies,
  7. Mahdi, M. Ahmad, (1995), Islamic Banking Modes for House Building Finance, IRTI, Islamic Development Bank,
  8. Mannan M.A, (1996), Financing Development in Islam, IRTI, Islamic Development Bank,
  9. Naqvi Syed Nawab Hyder Ethics and Economics: . Leicester, The Islamic Foundation. 1981.
  10. Nomani, Farhad  &  ,  Ali,  Islamic Economic Systems:   –  Zed Books Ltd., London, 1994.
  11. Nuti, D. Haris, (1995), The Economics of Participation, IRTI, Islamic Development Bank,
  12. Siddiqui, M.N., Muslim Economic Thinking,  Leicester, The Islamic Foundation.
  13. Tago, Usman, Justice: Introduction to Islamic Finance, (2000), Idara-tul- ma’arif
  14. Yusaf , Imam Abu, Kita bur Kharaj, Lahore, Islamic Book Centre,

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