Revisiting Islamic Economic Principles for Sustainable Development: A Theoretical and Policy-Oriented Analysis

Abstract

The accelerating global sustainability crisis has prompted renewed scholarly interest in alternative economic paradigms capable of addressing the structural deficiencies of conventional capitalist frameworks. Despite a growing body of literature on Islamic economics, a critical theoretical gap persists: existing scholarship either romanticises Islamic economic principles without critically interrogating their institutional preconditions, or reduces them to peripheral instruments of financial engineering rather than examining their systemic potential as a coherent development paradigm. This paper addresses that gap by constructing a rigorous theoretical framework that explicates how core Islamic economic principles — specifically the prohibition of riba (interest), participatory risk-sharing arrangements, zakat-driven wealth redistribution, and an overarching ethical-moral governance structure — can be analytically mapped onto the three pillars of sustainable development: economic efficiency, social equity, and environmental stewardship. Employing conceptual analysis and critical discourse, the paper argues that Islamic economics offers not merely supplementary mechanisms but a structurally distinct alternative architecture for development. Policy implications are developed with particular emphasis on Pakistan and comparable Muslim-majority developing economies. The paper concludes that realising this potential demands institutional reform, regulatory coherence, and the resolution of persistent governance deficits.

Keywords: Islamic economics; sustainable development; riba prohibition; zakat; risk-sharing; ethical finance; developing economies