Helping the Poor Help Themselves: Flaws with Conventional Foreign Aid, and Arguments for an International Islamic Financial Institution

This dissertation proposes a new international development institution that is inspired by the Islamic Economic System (IES). The International Islamic Financial Institution (IIFI) is fundamentally different from current foreign aid institutions, and can complement and supplement the current aid system. The current system focuses on giving aid to the governments of developing countries and least developed countries (LDCs) to boost their economic growth as the means to achieve economic and human development. The assistance given by the donors usually is accompanied by policy reform conditions imposed on the economy and politics of receiver countries. Unfortunately this method, which is based on thrusting developmental ideologies and strategies from outside on governments of the receiver countries, suffers from a number of flaws. IIFI is founded on the idea of helping the people in the developing countries and LDCs to help themselves. Once people develop in this “bottom up” manner, development of their governments and countries follows. Part I discusses the current foreign aid system. Chapter one reviews and analyses the different historical views which contributed to shaping foreign aid during the past decades. This Part also discusses the different motives behind sending aid to the developing and LDCs countries and the major players involved in the process of development, namely the World Bank and the IMF. Chapters two and three review and discuss the flaws in the current aid system in terms of aid institution management, operations, and application. Part II discusses the IES and reviews its main economic and developmental features. The most important features on which chapter four focuses are the fair distribution of wealth, prohibition of interest, and Islamic finance tools based on the concept of risk sharing. This chapter also provides a comparison between the IES and other major economic systems. Capitalism, Socialism, and Welfare State systems are those alternatives, yet the IES offers explanations and solutions to flaws in the current system in a way that the alternatives do not. Part III proposes the IIFI. This institution is suggested as an improvement relative to existing aid institutions. Its main objective in financing is to help the needy and underprivileged people help themselves. The ideology of the IIFI is that development should come from the people, and not delivered to them. Appendix A sets out the IIFI Charter, with a detailed description of its management and structure, operation and dispute settlement system.

Grantor dc:publisher

University of Kansas

Year dc:date.issued

2015

Author dc:creator

• Radhi, Zainab

Advisor dc:contributor.advisor

• Bhala, Raj

• International law
• Economic development
• Foreing aid
• Human development
• International development
• Islamic banking
• Islamic economic system

Statement dc:rights

• Copyright held by the author.

Language dc:language.iso

en

Dc Identifier Other

http://dissertations.umi.com/ku:14202

OAI identifier oai:identifier

oai:kuscholarworks.ku.edu:1808/37455