Integrating the third sector into a three-sector economic framework : towards enhancing social welfare in an Islamic economy

Abstract

This dissertation attempts to fulfil three research gaps in relation to the third sector from an Islamic economic aspect. It tackles the lack of adequate understanding of the importance of the third sector as a key part of the economy, the lack of a systematic conceptualization of the sector, and the lack of a framework integrating the sector in the economy for social welfare provision. The study undertakes two main kinds of methodology, a critical review of the literature on the third sector and an integrative analysis synthesizing adopted Islamic and Western literatures. The study consequently explores the diverse contemporary third sector concepts and frameworks to establish a unifying concept of the sector. It further presents a systematic structure of a three sector economy with the third sector as an integral component in an Islamic economic system. Towards the development of such a macroeconomic framework, it looks at both historical and present-day roles and the importance of the third sector from an Islamic economic context. It additionally proposes a three-sector economic model with a well-defined scope and characteristics of the third sector while detailing how the economic sectors should cooperate and interact towards the realization of public welfare (maslahah) and Islamic economic goals. The second part of the dissertation describes the interaction of the third sector with all sectors in a three-sector economy for social welfare provision. It presents a modified income flow model showing the movement of income transfers and welfare services around the economy. To complete the macroeconomic framework, it lastly suggests a practical maqasid-al-shari’ah based resource allocation tool led by an Islamic Third Sector Commission (ITSC) to assist third sector organizations (TSOs) as well as other economic sectors in better social welfare provision. The overall macroeconomic framework is expected to provide a better understanding of this uniquely complex and fundamental sector for the benefit of OIC countries in establishing a more sustainable third sector and for improving social welfare.