The Economic Origins of Islam : Theory and Evidence

Alireza Naghavi (University of Bologna)

November 26, 2009, 11:00–12:30


Room MF 323

Development Economics Seminar


This research examines the economic origins of Islam. It empirically demonstrates that Muslim countries, virtual countries and ethnic groups, exhibit highly unequal regional agricultural endowments. This particular type of geography (i) determined the economic aspects of the religious doctrine upon which Islam was formed, and (ii) shaped its subsequent economic performance. The theory argues that the unequal distribution of land endowments conferred differential gains from trade across regions, fostering predatory behavior from the poorly endowed ones. In such an environment it was mutually beneficial to institute a system of income redistribution. However, a higher propensity to save by the rich would exacerbate wealth inequality rendering redistribution unsustainable, leading to the demise of the Islamic unity. Consequently, income inequality had to remain within limits for Islam to persist. This was instituted via restrictions on physical capital accumulation. Such rules rendered the investments on public goods, through religious endowments, increasingly attractive. As a result, capital accumulation remained low and wealth inequality bounded. Geography shaped the set of economically relevant religious principles of Islam affecting its economic trajectory in the preindustrial world.

JEL codes

  • F10: General
  • O10: General
  • O13: Agriculture • Natural Resources • Energy • Environment • Other Primary Products
  • O16: Financial Markets • Saving and Capital Investment • Corporate Finance and Governance
  • O17: Formal and Informal Sectors • Shadow Economy • Institutional Arrangements
  • O18: Urban, Rural, Regional, and Transportation Analysis • Housing • Infrastructure
  • Z12: Religion


Alireza Naghavi (University of Bologna), The Economic Origins of Islam : Theory and Evidence, Development Economics Seminar, Toulouse: TSE, November 26, 2009, 11:00–12:30, room MF 323.