|Research in Islamic Economics: The Missing|
|Published by Abdul Ghani|
|Friday, 08 April 2011 15:28|
Fard ‘ayn component 
Using data from a few, mainly publicly available sources, a recent study by Nazim Ali
1. document the current status of Islamic economics and finance research based on available publications
The following findings are from his paper, but the present writer makes some observations relevant to this session, focusing on research requirements.
1. The numbers of research output in the form of articles, books, conference papers and ‘other materials’ (till 1999/2000) is quite significant at 6484 items. Progress was especially visible in the 1990s, where output more than doubled from the previous decade, mainly due to the establishment of Islamic financial institutions.
2. While the total numbers and the growth rate in the last decade may give an impression that Islamic economics is gaining popularity and is on the right track, it would probably be accepted that a huge proportion of these publications would be in the area of Islamic banking and finance, not in Islamic economics, especially in areas dealing with theory and foundations. While Ali’s paper does not elaborate on the areas of publication, in an unpublished work done with colleagues involved with the IIUM Journal of Economics and Management that looked at the four major Islamic economics journals since the mid-1980s, this ‘trend’ was very clear.
3. According to Ali, while the major teaching and research centers (universities) in Islamic economics are based in Asia (Kuala Lumpur and Pakistan) the major share of the output (articles) is from Europe while books and conference papers are from the middle east. This indicates greater academic orientation in Europe (and the USA) compared to areas considered to be in the Muslim world. The output from the Middle-East consists more ‘applied research’ and ‘product development’ output in the area of Islamic finance.
This finding deserves greater attention among Islamic economists and those who are in the funding agencies. Certainly in the case of the Kulliyyah of Economics and Management Sciences, IIUM, the first 25 years of its existence has been primarily focused on teaching. While proud that the KENMS has produced about 2,000 graduates from about 80 countries, the research agenda and publication record in the area of Islamic economics is still very much in its infancy. Even the number of active teachers and researchers who are fully dedicated to the teaching of, and research in, Islamic economics (as opposed to Islamic banking and finance) is less than 25% of its faculty, indicating a serious need to re-focus on creating the next generation of Islamic economists. From discussions with colleagues in other institutions in Malaysia and other countries, the same trend seems to exist everywhere.
Ali also mentions that recently, some major publishing houses based in the west have become involved in publishing materials in Islamic economics and Finance. However, a cursory look into the titles produced in the last five years indicates a very clear bias to Islamic banking and Finance. Where is Islamic economics? Has commercial interest and market forces totally determined the direction and areas of research? Is this a healthy trend and are we to allow this to continue?
4. In the section on research trends, Ali (2007) divides research into two main categories, theoretical and applied. One limitation that was noticed in his write up was that he seemed to focus primarily on Islamic finance, rather than including Islamic economics. Hence when he observes that ‘the industry has long realized the importance of academic research for its growth’ he seems to be referring primarily to the Islamic finance industry. He rightly sees universities and other higher institutions of learning as the main seats of research in Islamic finance and points to the fact that it is mainly academics, researchers and graduate students who form the bulk of researchers in the area.
However two issues have to be pointed out. Firstly, if we accept the premise that Islamic banking and finance has to have Islamic economic foundations, then here has not been a sufficient amount of research in those foundations. Secondly, if we accept the statement that the ‘industry’ realizes the importance of academic research to its own survival, we must also ask who sets the agenda of research? Does ‘theoretical/academic’ research in Islamic finance answer to the demands of industry or does academic research chart out the future path of the industry? While logic will say that it is a two way process, my view is that it has been, and is still, the industry that determines the direction of theoretical research in academia and this trend is ever-increasing. In terms of funding, it does not take a genius to figure out that if left to its own, private financial institutions will fund research in areas and in directions that it sees important and not easily fund research in areas that only seem to be theoretically stimulating but with no apparent ‘practical’ outcome.
Are pure ‘theoretical’ studies not important? If we say that pure theoretical studies are important, who will fund it? Also very important is who will conduct this type of research? From the example of the KENMS, the number of academics and students who choose to do ‘pure’ theoretical research are even a smaller and rarer commodity.
The situation is equally depressing in Islamic economics proper. Very few academics continue to work in building the theoretical foundations of Islamic economic theory and not many bother to focus on policy areas in Islamic economics. Before the west developed such sophisticated analyses of Islamic finance, did they not dedicate sufficient resources- financial, human and time- to the development of solid theoretical foundations in economics and finance? Unfortunately, in Islamic economics, after less than 20 years of writings in economics and its foundations, we Islamic economists abandoned our own field and many decided to join the juggernaut of Islamic finance. While we need people in Islamic finance, we have to find the resources and help create a ‘critical mass’ in the theoretical foundations area if we want to sustain Islamic economics and finance.
5. Unfortunately, Ali’s paper does not discuss funding for research much. While industry led research has sufficient funding, he admits that research in other areas is very constrained due to limited funding, relying on general all-purposes grants from universities or institutions or from personal funds. He mistaken assumes that public institutions (including the IIUM) have reasonable funding for Islamic economic research (especially for the ‘academic/theoretical category). The remaining parts of this paper will try to discuss this very important issue of funding research in Islamic economics, especially in foundational areas, that I hope the Congress will agree constituents as fard ‘ayn for the sustainable future of Islamic economics, banking and finance. The paper will argue that by international standards, the amounts of public financial resources dedicated to research in Islamic economics, is insufficient.