The Organization of Islamic Conference (OIC), is comprised of fifty-seven Islamic nations and seeks to unify its members under intentions to enhance sustainable economic progress. The OIC has many goals to enhance the standard of lives and overall economy in its member nations. As a result, the OIC studies vast macroeconomic strategies that have historically shown to benefit economies (small scale and large scale). Simultaneously, the OIC seeks to promote Islamic finance tools such as Sukuk instruments and has found how they can further improve economic prosperity in the region. Lastly, OIC members must observe the unique socio-cultural, historical, and political perspective of each nation before facilitating commerce and pursue a diverse portfolio that creates vast connections amongst members.

The following six articles focus on: Sukuk-based infrastructure investment, effective Sukuk-based market portfolio diversification, Russian energy sector analysis, Bangladesh economic analysis, government spending effect on economic growth in Sudan, and education’s effect on holistic economic development in rural Indonesia. A brief synopsis of each article is given below.

The first article, “Financing Super-Infrastructures Using ISTISNA-SUKUK Based Monetary POLICY for Faster Economic Development,” explains infrastructure financing based on interest-alternative methods. Countries often finance projects via public debt and they must continuously pay interest. However, interest-based financing is unlawful (haram) in Islamic finance which is relevant to many OIC nations and it can drain billions of dollars to foreign creditors. This paper explores how modern airports can be financed with an Istisna-Sukuk-based expansionary monetary policy. A Central Bank can buy and sell Sukuk (interest-free) in the open market as monetary policy tools. Sukuk is issued against assets (in this case, the Airport) and their holders are the true owners of the Airport who derive their income royalties off the asset. Istisna-Sukuk-based expansionary monetary can increase output and employment while also eliminating public debt. Thus, the government will have more funds available for public spending. Eventually, it can help prevent transfer of domestic resources as interest payments to foreign creditors.

The second article, “Sukuk Model for Islamic Monetary Instrument in Indonesia,” sates that Indonesia has had some Islamic monetary instruments such as Bank Indonesia Islamic Certificate (SBIS), Bank Indonesia Islamic Facility (FASBIS), SBIS repurchase (repo), and Government Sukuk (SBSN) repo. However, the paper introduces IILM (International Islamic Liquidity Management) as the global short term Sukuk (Islamic investment securities) issuer. It has a unique Sukuk model which can become a reference model to further diversify the Islamic monetary instruments (central bank Sukuk) within Indonesia. This paper could be the first one to propose this new model for the central bank Sukuk in the country.

The third article “Soviet and Russian Foreign Energy Policy: Comparative Analysis” offers a comparative description of Russia’s foreign policy on energy during the Soviet period and afterwards. The focus is drawn to the development peculiarities of the energy sector as of the most important economic sphere in terms of the dynamic political conditions international relations. The author attempts to draw a comprehensive analysis of internal and external factors influencing Russia’s energy policy. The article seeks to observe the motivation behind Russia’s political decisions in the energy sector, and therefore to facilitate the search for new potential forms and opportunities for international cooperation.

The fourth article, “Macroeconomic variables and Dhaka stock exchange returns: An application of autoregressive distributed lag bounds testing approach,” investigates the fundamental connection between selected macroeconomic indicators: exchange rate (ER), industrial production index (IPI), broad money supply (M2), call money rate (CMR), and stock index returns (IR) in Bangladesh, based on monthly data from January 2008 to April 2017. The Autoregressive Distributive Lag (ARDL) bounds testing approach has been applied to explore this dynamic relationship. In the results, the coefficients of M2 and CMR are statistically significant whereas that of ER and IPI are not. The results of Granger causality show that a unidirectional causality runs from ER to IR, CMR to IR, ER to IPI, and CMR to ER whereas a bidirectional causality is found between IPI and M2. This research is of great significance for domestic and foreign stakeholders, and especially for policy-makers.

The fifth article, “Causality Between Government Expenditure and Economic Growth in Sudan: Testing Wagner’s Law and Keynesian Hypothesis,” examines the possible existence of short-term and long-term relationships between government expenditure and economic growth for Sudan by testing the validity of Wagner’s law and Keynes’s hypothesis from 1977 to 2016. The results showed little evidence to support either Wagner’s law or Keynes’s hypothesis. Therefore, the growth of public expenditure in Sudan is not directly dependent on nor determined by economic growth, as Wagner’s law states. However, it is possible to examine disaggregated data to investigate public expenditure growth in Sudan in terms of Wagner’s law.

The sixth article, “Holistic Development and Wellbeing based on Maqasid Al-Shariah-The case of South Kalimantan, Indonesia,” aims to achieve development economically based on a framework comprised of five components: preservations of religion, life, intellect, posterity, and wealth. The sample consists of 418 randomly selected Muslims respondents living in South Kalimantan, Indonesia. The results show that South Kalimantan's level of holistic development is satisfactory and education plays a significant factor in holistic development, where it increases wellbeing in all aspects – intellect, life, posterity, wealth, and religion. Men lag women in terms of development, while a stable and happy marriage impacts positively on the overall wellbeing. Thus, relevant policy recommendations related to education and the promotion of the institution of marriage must be emphasized to attain holistic development.

Nebil DABUR

Editor-in-chief

Articles of the Journal of Economic Cooperation and Development, Vol.40 No.4 (2019)