Islamic Foundations of International Trade and Economic Growth: A Panel Data Analysis of Necessities, Needs, and Luxuries

This study aims to empirically validate the theoretical foundations of Islamic international trade through a panel data approach. Building upon Islamic economic principles, particularly Al-Shatibi’s classification of human needs, we investigate the impact of exports and imports categorized into necessities, needs, and luxuries on GDP growth. A panel dataset covering 53 developing and 28 developed countries over the 2005–2015 period is analyzed. Using Herfindahl-Hirschman Index to measure monopolistic competition, the study employs fixed effects panel regression models. The findings reveal that international trade according to the priorities concept of Al-Shatibi has a significant influence on economic growth, with varying impacts across categories and regions. This paper contributes to bridging Islamic trade ethics with modern empirical economics.