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This paper presents an alternative approach to draw the main features of the Islamic political system from the basic Islamic values as well as contemporary human experiences. This would involve a great deal of textual evidence and their interpretation. It is common to provide historical analysis based on the experience of “Saqifah(t) Bani Saad” with the selection of the first Caliph Abu Bakr, as well as the method used to select the three following Caliph. The analysis of the Islamic political system through the use of economic methodology is rare.
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In addition, the political processes directly influence economic policies, including fiscal, monetary, trade and development policies, especially in the ways are formed and implemented. Through the political processes, the shape of markets is formed, the taxation system is setup and government budget is determined.
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While the political processes are not carried out in the market, it can influence economic decisions related to consumption, saving, investment and exchange in no small way. Any economic system will certainly be influenced in institutions and rules by the underlying political system.
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