The Unseen Handbrake: Sharia Law as the Endogenous Constraint on Economic Modernization in Muslim-Majority Societies

Persistent economic underdevelopment characterizes a disproportionate number of Muslim-majority nations. Conventional analyses, often focusing on exogenous factors like colonial legacies, geopolitical conflict, or resource endowments, consistently fail to provide a complete explanatory framework. This paper advances a more fundamental thesis: that the socio-legal architecture of Sharia law itself functions as a primary endogenous constraint, systematically inhibiting the institutional, financial, and socio-cultural prerequisites for sustained, modern economic growth. We dissect key Sharia-derived doctrines—including the prohibition of interest (riba), regulations governing property and inheritance, codified gender asymmetries, and specific contractual forms—arguing they create profound structural inefficiencies, elevate transaction costs, misallocate capital (both financial and human), and foster institutional path dependencies resistant to superficial reforms. Furthermore, we explore the potential cognitive and cultural corollaries of a Sharia-centric worldview, suggesting possible friction with the rationalistic, future-oriented, and innovation-driven ethos underpinning contemporary economic dynamism. By integrating historical institutional analysis with critiques of contemporary Islamic economics and finance, and critically re-evaluating common counterarguments, this paper posits that the pervasive influence of Sharia constitutes an often-underestimated, yet critical, variable explaining the economic divergence observed in much of the Muslim world. Addressing this deep structural impediment is argued to be a prerequisite for unlocking genuine economic potential.