Waqf

About: Waqf is a research topic. Over the lifetime, 1760 publications have been published within this topic receiving 11823 citations.

Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation

Abstract: Amillennium ago, around roughly the tenth century, the Middle East was an economically advanced region of the world, as measured by standard of living, technology, agricultural productivity, literacy or institutional creativity. Only China might have been even more developed. Subsequently, however, the Middle East failed to match the institutional transformation through which western Europe vastly increased its capacity to pool resources, coordinate productive activities and conduct exchanges. True, the institutional endowment of the Middle East continued to evolve. But in certain areas central to economic modernization change was minimal, at least in relation to the structural transformation of the West and, for that matter, the Middle East’s own evolution during the early Islamic centuries. In eighteenth-century Cairo, credit practices hardly differed from those of the tenth century. Likewise, investors and traders were using enterprise forms essentially identical to those prevalent eight centuries earlier. By the nineteenth century, the entire Middle East was clearly “underdeveloped” relative to western Europe and its offshoots in the new world; and by the twenty-first century, it had fallen markedly behind parts of the Far East as well. This essay offers reasons why the Middle East became underdeveloped. In particular, it points to certain Middle Eastern institutions, including ones rooted in the region’s dominant religion, as past and in some cases also continuing obstacles to economic development. The institutions that generated evolutionary bottlenecks include: 1) the Islamic law of inheritance, which inhibited capital accumulation; 2) the strict individualism of Islamic law and its lack of a concept of corporation, which hindered organizational development and contributed to keeping civil society weak; and 3) the waqf, Islam’s distinct form of trust, which locked vast

The provision of public goods under Islamic law: origins, impact, and limitations of the waqf system.

Abstract: The Islamic waqf appears to have emerged as a credible commitment device to give property owners economic security in return for social services. Throughout the Middle East, it long served as a major instrument for delivering public goods in a decentralized manner. In principle, the manager of a waqf had to obey the stipulations of its founder to the letter. In practice, the founder's directives were often circumvented. An unintended consequence was an erosion of the waqf system's legitimacy. In any case, legally questionable adaptations proved no substitute for the legitimate options available to corporations. As it became increasingly clear that the waqf system lacked the flexibility necessary for efficient resource utilization, governments found it ever easier to confiscate their resources. In the 19th century, the founding of European-inspired municipalities marked a formal repudiation of the waqf system in favor of government-coordinated systems for delivering public goods. Whatever its level of development, every society must grapple with the challenge of providing "public goods"-goods that are nonexcludable (not easily denied to unauthorized consumers) as well as non-rival (capable of being enjoyed by many consumers at once). The private provision of such goods is not impossible; language conventions and measurement standards offer examples of pure public goods that have emerged without the guidance or interference of a governing authority. Yet, if only because competitive markets do not always supply such goods efficiently, various forms of state intervention have been ubiquitous. The public good of national defense tends to be supplied directly by governments. Other public goods are provided by government-enforced private monopolies. For example, technological innovations are promoted through patents that give inventors exclusive rights to exploit their inventions commercially. Of course, the known mechanisms do not guarantee efficiency (Comes & Sandler 1996:ch. 1-2, 6-10). Nor are they necessarily motivated by this goal. Rent-seekers promote delivery mechanisms that raise prices above the levels necessary for profitability (Rowley et al. 1988; Shleifer & Vishny 1998:ch. 1-9). In the premodern Middle East, from 750 C.E., perhaps even earlier, an increasingly popular vehicle for the provision of public goods was the waqf, known in English also as an "Islamic trust" or a "pious foundation." A waqf is an unincorporated trust established under Islamic law by a living man or woman for the provision of a designated social service in perpetuity. Its activities are financed by revenue-bearing assets that have been rendered forever inalienable. Originally the assets had to be immovable, although in some places this requirement was eventually relaxed to legitimize what came to be known as a "cash waqf." The reason the waqf is considered an expression of piety is that it is governed by a law considered sacred, not that its activities are inherently religious or that its benefits must be confined to Muslims. Traditionally, various public goods that are now generally provided by government agencies were provided through private initiatives. Not until the second half of the 19th century did the giant cities of the Middle East begin to establish municipalities to deliver urban services in a centralized and coordinated manner. Even a lighthouse on the Romanian coast was established under the waqf system,' which is particularly noteworthy in view of the modern intellectual tradition that treats the lighthouse as the quintessential example of a pure public good that must be provided by the government out of tax revenues. It is in reaction to this tradition that Ronald Coase (1974) drew attention to several 19th-century British lighthouses constructed and administered by private individuals.2 However, contrary to what is sometimes presumed, Coase did not discover cases in which the state played no role whatsoever. …

Awqaf in history and its implications for modern islamic economies

Abstract: This paper aims at analysing the relevance of the historical awqaf system for modern Islamic economies. The main argument focuses on the fact that the awqaf system has provided throughout Islamic history all the essential services at no cost to the state. Thus, a successful modernisation of the system implies a significant cut in government expenditure and all the associated benefits; including downsizing the state sector and a reduction and even an eventual elimination of riba. As far as the modernisation of the system is concerned, historical evidence indicates that the real exiting potential lies in the cash awqaf. It is envisaged here that two powerful Islamic financial institutions, the cash awqaf and mudarabah need to be combined. It is argued further that this combination should take place within the framework of Islamic banks and thus alter the portfolio of these banks in the desired direction, i.e. increasing the mudarabah/murabahah ratio.

Waqf, perpetual charity and poverty alleviation

Abstract: This paper discusses the potential role of the institution of waqf in poverty alleviation, particularly in the developing world. It attempts to define a new approach to poverty analysis and suggests a way to make the role of waqf more effective in the poverty alleviation and socio‐economic development of a resource‐poor country.

The Role of Islamic Finance in Enhancing Financial Inclusion in Organization of Islamic Cooperation (OIC) Countries

Abstract: The core principles of Islam lay great emphasis on social justice, inclusion, and sharing of resources between the haves and the have nots. Islamic finance addresses the issue of “financial inclusion” or “access to finance” from two directions — one through promoting risk-sharing contracts that provide a viable alternative to conventional debt-based financing, and the other through specific instruments of redistribution of the wealth among the society. Use of risk-sharing financing instruments can offer Shar ahcompliant microfinance, financing for small and medium enterprises, and micro-insurance to enhance access to finance. And redistributive instruments such as Zak h, adaqat, Waqf, and Qar -al- asan complement risk-sharing instruments to target the poor sector of society to offer a comprehensive approach to eradicating poverty and to build a healthy and vibrant economy. Instruments offered by Islam have strong historical roots and have been applied throughout history in various Muslim communities. 1 Mahmoud Mohieldin serves as World Bank President’s Special Envoy. Zamir Iqbal is Lead Investment Officer with the Treasury of the World Bank. Ahmed Rostom is a Financial Sector Specialist with the World Bank and is also affiliated with The George Washington University in Washington, D.C. and. Xiaochen Fu is pursuing graduate studies at Kennedy Business School at the Harvard University. The views expressed in this paper are entirely those of the authors and do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent. An earlier version of the paper was presented at 8 th International Conference on Islamic Economics and Finance in Doha, Qatar, held from December 19-21, 2011.