Islamic Economics: Contemporary Approach in the Arab World

In the context of the concerns raised regarding the cooperation with the Arab world, the challenge for international business is to respect the Islamic principles and values. Currently, religion in the Arab world begins to be seen rather as a constructive power than a destructive one. The present paper comprises a presentation of what Islamic financial system implies for the economies of Arab countries nowadays and a comparison between the performance of Islamic and conventional banks in Pakistan. It is shown that the Islamic banking system is reliable and may represent a strong competition for conventional banks in the Islamic world. In the Gulf countries where Islamic banking has begun to play an important role, a new type of Islamic capitalism is taking shape. In these countries, we can say that the development and economic diversification were sustained in a more appropriate manner than in North African countries, especially in Egypt, Libya and Algeria, where government policies were both anti-capitalist and against the implementation of the Islamic law sharia'a in finance and banking. The origins of "Islamic economics" are traced back to the writings of Savyd-Abul Ala Mawdudi, a Pakistani social thinker who wanted to transform Islam into a "completely new kind of life." The "Islamic way of life", a concept put forth by Mawdudi, which together with "Islamic Ideology", "Islamic politics", "Islamic constitution" have become key concepts in the discourses that support the spiritual renewal for Muslims and the introduction of the "Islamic economics" concept. In his writings, Mawdudi argues that Islam is more than a set of rituals. It includes all the areas of human life, for instance education, art, medicine, law, politics and economics. In order to prove his point, he laid the bases of several Islamic disciplines, among which "Islamic economics" is a notable one.