Zakat and Economic Development: Micro and Macro Level Evidence from Pakistan

Authors

Muhammad Azam Ph. D Scholar, Federal Urdu University, Islamabad, Pakistan Author
Nasir Iqbal Staff Economist, Pakistan Institute of Development Economics, Islamabad, Pakistan Author
Muhammad Tayyab Research Scholar, AJK University, Muzaffarabad, Pakistan Author

Zakat, transfer payment, social welfare, economic growth,, Pakistan

Zakat, as a transfer payment, is an important instrument to achieve social welfare in a society in

Islamic ideology. This study attempts to analyze the impact of Zakat on economic development

using micro and macro level data for Pakistan. The overall analysis shows that Zakat has a

positive impact on economic development in Pakistan. More specifically, micro evidence shows

that Zakat significantly enhances the welfare of the households. Macro evidence also highlights

that Zakat significantly contributes to economic growth in Pakistan. These findings have

important implications for Pakistan.