Articles

Iran can learn from Japan's astounding transformation to a capital-exporting nation. Japan's success can be explained by certain factors including, among other things, corporate 'financial dualism', the household savings rate, legal advantages such as assistance from the Bank of Japan, and a transformation from a 'securities-based' to a 'bank-based' financial system. Iran should follow the Japanese example and develop a 'bank-based' financial system.

Since the 1930's and the New Deal, some fundamental questions and crises have come to the forefront of economic thought. Among these issues are: the Phillips curve and the idea of optimal employment rates; the end of fiscal and monetary policy as remedies for every problem; the lack of market mechanisms to reconcile gaps between social and private costs; and the ideological commitment to neoclassical economics, which has caused it to be upheld despite its contradictory elements. Communist economics is adopting a religious bent and is thus becoming like capitalism.

The world's first Islamic bank was established in Dubai on October 1, 1975. The bank has performed well for seven years. Dubai Islamic Bank performs all the functions of a conventional bank within the framework of Islamic banking principles. The bank possesses a special 'zaka account' used to help certain institutions and the needy. Dubai Islamic Bank has started several projects, including a monthly magazine as well as real estate, industrial, and commercial projects. Recently, the bank has entered the field of trading and may soon expand to Pakistan.

Mr. Mohammed Abdul Rahman Al-Bakr encouraged Muslims to give Islamic banks and financial institutions their full support. Welfare states were first established by Muslims. Islamic institutions like zaka and inheritance laws provide economic justice and security.

Everyone must support and aid the banking system's development if it is to Islamize. Ways to abet this process include the announcement of a definite schedule after fund requirements are met and the granting of advantages to companies with

Following the Islamic revolution in Iran, it became possible to analyze in real terms the problems that face an Islamic economy. Iran is viewed with an eye toward shedding light on the difficulties other economies might face if they moved toward

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Early Shiite jurists believed that Islamic economics stipulated the private ownership of property and the means of production. Since the early 1970s, however, 'radical' interpreters have conceptualized a system akin to Marxism, while 'reactive' interpreters have reacted against this understanding. 'Radical' interpreters believe God to be the true owner of all property and divide property in three categories -- private, public, and governmental. 'Reactive' elements identify human labor as the root of wealth and property.

A decade-long comparison of the Islamization of the banking systems in Iran and Pakistan aims to uncover the similarities and differences in the experiences of the two countries. Iran's drive to conform to Islamic practices is more powerful than Pakistan's. The Pakistani banking industry has not been innovative enough in developing Islamic financing methods, and bank privatization in Pakistan may make compliance with Shari`a more complicated.

Iran and Pakistan both have resolved to adopt Islamic economies -- Iran has rapidly transformed its system, while Pakistan is moving gradually and has begun the conversion with the banking industry. While some had feared that Islamization of the economies would cause a terrible breakdown in the financial system, time and evidence have proven their worries unfounded. To the contrary, there has been a quick increase in private-sector deposits in both Pakistan and Iran, suggesting that Islamic economics can successfully invest a society's assets and galvanize a nation's economy.