Journal of Islamic Monetary Economics and Finance, Vol. 9, No. 2 (2023), pp. 251 - 274
p-ISSN: 2460-6146, e-ISSN: 2460-6618

SOCIOECONOMIC DEVELOPMENT IN MUSLIM
COUNTRIES: IBN KHALDUN’S DEVELOPMENT MODELBASED APPROACH
Ira Eka Pratiwi
Kyung Hee University, South Korea, pratiwi.iraeka@khu.ac.kr

ABSTRACT
This study constructs a measure of socioeconomic development in Muslim countries
based on Ibn Khaldun’s model of development. It proposes a composite index of
development based on three dimensions, namely human empowerment, government
and institution, and economic growth, and terms it as Ibn Khaldun-based socioeconomic
development index (I-SDI). A total of 13 indicators are selected to represent each
dimension and are employed for construction of the index using an equal weighted
method and additive aggregation approach. In general, we note that many Muslim
countries are underperformed., as indicated by the low value of I-SDI. We further find
that Muslim countries that perform well in government and institution dimensions
tend to experience better socioeconomic development. We believe that the proposed
I-SDI is non-redundant and robust and hence can be utilized as an alternative way of
measuring the development in Muslim countries. In other words, the Ibn Khaldun’s
model of development is exceptionally meaningful in explaining the socio-economic
performance of Muslim countries.
Keywords: Ibn Khaldun’s development model, Muslim countries, Development measures,
I-SDI.
JEL classification: B3; E0; I3; O1.
Article history:
Received
: September 13, 2022
Revised		
: April 3, 2023
Accepted
: May 30, 2023
Available online : May 31, 2023
https://doi.org/10.21098/jimf.v9i2.1574

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I. INTRODUCTION
How to measure the progress of an economy has received substantial attention
in academic research. The GDP per capita has been commonly used to reflect
economic growth of a country. However, it has been criticized by some scholars
that GDP only measures the monetary aspect, while the development should relate
to many other aspects of life. Therefore, scholars and academicians have proposed
alternative measures of economic development by involving multidimensional
aspects of a human’s life. Perhaps, the most well-known measure that considers
some dimensions of a human’s life is Human Development Index (HDI). Alkire
and Santos (2010) further present a new multidimensional poverty measure
(Multidimensional Poverty Index) by using the households’ survey to identify
the acute poverty in three main dimensions, namely education, health, and the
standard of living. Moreover, many other measures of development have also
been constructed. Ravallion (2012) lists several of these indices, which include
Physical Quality of Life Index, Environmental Performance Index, Doing Business
Index, and Worldwide Governance Indicators. Still, the construction of these
measures draws some criticisms from other scholars in terms of the selection of
the dimensions and indicators and the weighting and aggregation methods.
In this regard, Islamic scholars point to the need for additional indicators that
consider Islamic perspectives to identify a country’s development. According to
Yusof et al (2015), Muslim countries urgently need to develop an alternative measure
that represents a more holistic and inclusive concept of human development by
incorporating physical, intellectual, and spiritual aspects of human existence.
Anto (2011) argues that despite its usefulness, HDI is not fully compatible and
sufficient for measuring economic development from an Islamic perspective. He
introduces the Islamic Human Development Index (I-HDI) in order to measure
human development. Meanwhile, Rama & Yusuf (2019) develop an alternative
Human Development Index from the Islamic perspective and claim that the index
is more holistic and comprehensive in capturing the religious and ethical values
of socioeconomic development in Muslim countries. Batchelor (2013) introduces
a new Islamic Index of Well-being for Muslim Majority Countries, which is based
on principles derived from the Qur’an and Sunnah to comprise the key fields of
Personal Religiosity and Social Interactions. Dar and Otiti (2002) construct an
Ethics-augmented Human Development Index for all countries generally and
the OIC member countries specifically. Fevzi Esen (2015) and Hasan et al. (2018)
also suggest a method to construct the socioeconomic development, while Ghazal
& Zulkhibri (2016) propose an Islamic Inclusive Growth Index (I-IGI) to gauge
the performance of Muslim countries. These measures focus on socioeconomic
development based on the concept of Maqasid al-Shari’ah, considering the five
aspects of the objectives of the Shari’ah, namely the protection of faith (al-Din)
or religion, the protection of the intellect (al-Aql), the protection of posterity
(an-Nasl), the protection of wealth (al-Mal) and the protection of self (an-Nafs).
In addition, Nizam and Larbani (2017) propose a Maqashid Al-Shariah based
Composite Index for measuring Socioeconomic policies in OIC member countries.
Meanwhile, Rehman and Askari (2010) develop an Economic Islamicity Index for
Muslim countries, but Abdeldayem and Aldulaimi (2018) criticize this index and
conclude that this index does not conform to the Maqashid Shariah.

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While these Maqashid al-Shari’ah-based development measures do better
capture the essence of development in Islam, the selection of indicators for each
dimension remains debatable. For instance, the corruption perception index and
crime rate may be insufficient indicators of faith or religion dimension. Several
previous studies such as Jana-Masri & Priester (2007), Tiliouine et al. (2009), and
Mohd Dali et al. (2019), have established two dimensions of Islamic religiosity,
namely Islamic beliefs and Islamic practices. A set of questionnaires or at least the
most suitable survey data are required to gather the microdata of these proxies.
Therefore, the religion dimension related to Maqashid al-Shari’ah is hard to measure
and highly complicated. Thus, this study proposes a new measure of socioeconomic
development from the Islamic perspective by adopting Ibn Khaldun’s theory of
development as interpreted by Chapra (2008). Chapra explains that Ibn Khaldun
developed a powerful model to answer some of the most crucial issues in the rise
and fall of the Muslim world and calls it a multidisciplinary-dynamic theory of
development. The interaction between political, moral, institutional, social, and
economic variables determines the development and decline of an economy or state.
It is therefore, according to Mohammad (2010), the concept of development from
Ibn Khaldun is useful in the development of Muslim countries. This study further
attempts to classify the countries into four groups according to their performance
of socioeconomic development and per capita income. According to Chapra,
despite the fact that Ibn Khaldun’s model is more than 600 years ago, it remains
relevant in the Muslim world today. In other words, Ibn Khaldun’s insights still
hold relevance and have implications for understanding contemporary challenges
faced by the Muslim world. In line with Chapra, El-Kholei (2019) also states that
Ibn Khaldun’s writings can serve as a source to develop a model that addresses
issues related to sustainable development. This is because Ibn Khaldun observed
the rise and fall of the dynasties in his time and the past, and in the east and west.
To our best knowledge, there is limited research that adopts Ibn Khaldun’s
concept of development to measure the performance of Muslim countries. Most of
the studies, such as Putra & Indra (2016), Fatoni et al. (2019), and Affandi & Astuti
(2013), employ Ibn Khaldun’s model of development to identify the determinant
of poverty in Muslim countries. Thus, this study contributes to the literature in
the following two aspects. First, it provides a new measure of socioeconomic
development for Muslim countries. While the majority of existing research has
focused mainly on constructing the measures by implementing the concept of
Maqashid Shari’ah, this study proposes an alternative approach by using Ibn
Khaldun’s model of development to identify the performance of Muslim countries
as suggested by Chapra (2008). Second, this study complements existing studies
by defining more inclusive dimensions and indicators in terms of development
related to political, moral, social, institutional, economic, demographic, and
psychological aspects, as emphasized by Ibn Khaldun’s model of development.
In this study, three dimensions, namely Human Empowerment, Government
and Institution, and Economic Growth, are considered in the construction of the
development index.

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II. LITERATURE REVIEW
2.1. Ibn Khaldun’s Development Theory
Chapra (2008) praises Ibn Khaldun’s thought or model as influential in answering
the rise and fall of Muslim countries for several centuries. Although the model
consists of factors generated from historical events, it is capable of explaining the
decline and development of Muslim countries in the present day. According to ElKholei (2019), having witnessed the rise and decline of various ruling dynasties,
Ibn Khaldun built his method upon rational deduction and careful observation.
This makes his writings relevant even in the present era. In summary, El-Kholei
explains that in order to be sustainable, the city administrators and planners of
a region have to: 1) adopt and apply principles for good governance, 2) achieve
social justice, 3) protect the environment, and 4) mitigate market imperfections,
and encourage the transformation towards a green economy. Ibn Khaldun’s model
of development, as interpreted by Chapra is as follows:
₋₋ The strength of the sovereign (al Mulk) is through the implementation of
Shariah.
₋₋ Shariah cannot be implemented except by the sovereign (al-Mulk)
₋₋ The sovereign cannot gain strength except through the people (al-rijal)
₋₋ People cannot be sustained except by wealth (al-mal)
₋₋ Wealth cannot be acquired except through development (al-imarah)
₋₋ Development cannot be attained except through justice (al-adl)
₋₋ Justice is the criterion (al-mizan) by which God will evaluate mankind.
₋₋ The sovereign is charged with the responsibility of actualizing justice.
This model consists of socioeconomic and political factors, namely political
authority (G), Shariah (S), people (N), wealth (W), development (g) and justice
(j). These factors interact over time in a circular chain to cause the decline and
development of an economy (Mohammad, 2010). It is noteworthy that each factor
is considered to have the same function as the trigger for the direction of the circular
movements. If one factor moves in a negative direction and the other factors
respond in the same direction, then the circular movement will lead to a decline
more quickly. In the long run, it is difficult to identify the cause. Conversely, when
the other factors do not follow the same direction, then the failure may be much
slower.
The following are several inter-related variables described in Ibn Khaldun’s
model of development in order to promote the development of a country (Chapra,
2008; Mohammad, 2010).
2.1.1. The Role of Human-being
The rise or decline of a country depends on societal welfare. Thus, in Ibn Khaldun’s
development model, citizens are a key factor. Human beings have their power to
establish their relations with their fellow humans for the fulfilment of individual
needs through the collective good (Amirabedini, 2014). In other words, people have
the ability to change their life to a better quality of life but also may cause a failure
in their life. Economic development, therefore, does not only depend on economic
factors but also the moral, institutional, demography, social, psychological, and
political through a circular process in the long run.

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2.1.2. The Role of Development and Justice
As previously explained, people may create welfare through their ability and
power. However, they also may not be motivated if there is a lack of development.
Development covers not only economic growth or income but also all aspects
of human beings, such as the low rate of taxes, healthy life, secure jobs, and a
good physical environment. Development is impossible without justice because
the equality or fairness is fundamental to development. Justice provides equal
opportunities for all people to participate in the economy and being productive
with fairness and no discrimination creates trust and cooperation (Chapra, 2008;
Mohammad, 2010). In this circumstance, people are motivated to contribute to the
economy for achieving welfare.
2.1.3. The Role of State and Shariah
Shariah is the foundation of the Muslim society and directs human behavior
to be good. According to Amirabedini (2014), Shariah creates morality and
civic obedience, so it may encourage justice, improve harmony, and promote
development. Meanwhile, the role of the state is to protect human rights and
promote development by the implementation of Shariah or the rules fairly.
Therefore, there is a need for good governance to ensure justice. Bad rulership
may create worse people because they seek to protect themselves by means of lies,
tricks, and dishonesty. Corruption is an example of bad government.
2.1.4. The Role of Wealth
Economic growth of a country is achieved when people gain income (Fatoni et al,
2019). However, in order to create the income, people should have the opportunity
to participate in economic activities and markets provided by the state through
the implementation of fair laws or Shariah. The more people participate in the
economic activity equally, the more income they will gain, and thus, it will lead to
greater development and wealth. As the income and wealth rise, tax revenues also
increase and allow the government to expend more on the people’s well-being.
III. DATA AND METHODOLOGY
It is not straightforward to construct a reliable, useful, and comprehensive
composite index of development. In particular, there would be issues related to
the dimensions of development to be measured as well as the justification of the
selected indicators. It is, therefore, the first step in constructing a composite index
is to define the concept to be measured (Revallion, 2012; Mazziotta & Pareto, 2013).
For instance, since there is an argument that GDP is insufficient to measure the
well-being, a series of development index has been constructed as the alternative
tools. While any indices that measure the performance of an economy would not
be perfect, it is still important to continue improving the index to better capture
development of a country.
As mentioned earlier, this study attempts to build an alternative measure
to gauge the socioeconomic development in Muslim countries based on Ibn

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Khaldun’s model of development. Consequently, the index is composed of Human
Empowerment, Government and Institution, and Economic Growth. These
dimensions reflect the factors explained in Ibn Khaldun’s model of development,
namely state and Shariah, people, development and justice, and wealth. This study
further draws 13 indicators based on a thorough review of existing literature and
the availability of data. The justification for selecting the indicators is presented
in Table 1 below. This is a cross-country database covering 54 Muslim countries
which are members of OIC (the Organization of Islamic Cooperation) where the
data are available from SESRIC (Statistical, Economic and Social Research and
Training Centre for Islamic Countries). SESRIC provides data specifically tailored
for these countries, making it a comprehensive and reliable source for analysis.
Other countries outside the OIC may have different contexts, demographics,
and characteristics that would require separate data sources and considerations.
Therefore, the database focuses on the 54 Muslim countries within the OIC to
ensure consistency and relevance in the data analysis. It uses the latest data of
each country and each indicator and is collected from various sources, including
World Bank, World Economic Forum, UNDP (United Nations Development
Programme), SESRIC, Global Initiative Against Transnational Organized Crime,
and World Population Review. To standardize the data into one format, the minmax normalization method is used to normalize the original values, which are
converted into scores between 0-1, namely:

Meanwhile, the equal weighted approach is employed to calculate the composite
index of each dimension. This approach has been applied in the Multidimensional
Poverty Index (MPI) and various studies considering that each dimension and
indicators used in this present study are equally important. Three dimensions are
given equal weight (1/3 or 0.33 of each dimension) and each indicator within its
dimension is given equal weight, too. Hence, access to health, access to education,
access to the financial sector, gender equality, and life expectancy are weighted 1/15
each. Shariah law, voice and accountability, government effectiveness, corruption
control, and the crime prevalence are also given 1/15 equally. Employment rate,
per capita income, and income inequality are weighted 1/9 each. The Ibn Khaldunbased socioeconomic development index (I-SDI) is then aggregated by using the
common method namely additive aggregation through this following formula:

Where I-SDI is the Ibn Khaldun-based socioeconomic development index, ωi is
the weight of ith indicator, and Ii is the normalized score of the ith indicator.

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Table 1.
Dimension and Indicators of Socioeconomic Development Based on Ibn Khaldun’s
Model of Development (I-SDI)
Dimensions

Indicators

Human
empowerment
(1/3)

Access to
health (1/15)

Unit of
Measurement

Justification

Source

Government
It measures the input provided
SESRIC (2022).
Data used: 2019
expenditure on
by government in health and
health sector
education sectors to ensure the
(percentage of fulfillment of health and education
GDP)
accessibility as the basic needs
of human beings. It also reflects
Government
SESRIC (2022)
Access to
the government commitment to
Data used: 2019
education
expenditure on
expenditures for various forms
(1/15)
education sector
social infrastructure (McKinley,
(percentage
2010)
of total
government
expenditure)
SESRIC (2022)
Access to
Account
It is commonly used as a proxy
Data used: 2021
finance (1/15)
ownership
for financial inclusion. Access
at a financial
to finance is considered as
institution
a substantial mechanism in
promoting income equality and
economic growth (Gupta & Sharma,
2021). Account ownership reflects
the accessibility to the finance
sector. It measures the financial
inclusion in respect to lower
account costs, greater proximity to
financial intermediaries, stronger
legal rights, and more politically
stable environments (Allen et al.,
2016).
Gender
Gender equality It measures the gap achievement
WEF (World
equality
index
between woman and man in
Economic
(1/15)
four aspects, namely economic
Forum, 2022)
participation, educational
Data used: 2020
attainment, health and survival,
and political empowerment. The
great performance of gender equity
is considered crucial for enhancing
human capabilities and supporting
the economic development
(McKinley, 2010).
Life
Life expectancy
It is widely used as the proxy for
World Bank
Expectancy
at birth (years)
health indicator to measure the
(2022)
(1/15)
socioeconomic development of a Data used: 2021
country or region (Miladinov, 2020)
and reflects the longevity of the
people in a state (Vizard & Speed,
2016).

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Table 1.
Dimension and Indicators of Socioeconomic Development Based on Ibn Khaldun’s
Model of Development (I-SDI) (Continued)
Unit of
Measurement

Dimensions

Indicators

Government
and Institution
(1/3)

Islamic law
(1/15)

Implementation
of Shariah as
the basic law in
society

Voice and
accountability
(1/15)

Voice and
accountability

Government
effectiveness
(1/15)

Government
effectiveness

Corruption
(1/15)

Control of
corruption

Crime
prevalence
(1/15)

Criminality
Index

Employment
rate (1/9)

Employment
rate

Per capita
income (1/9)

GDP growth

Income
Inequality
(1/9)

Income
Inequality rate

Economic
growth (1/3)

Justification

Source

It reflects the application of Islamic
World
law as a legal system in a state. It
Population
consists of three form of Shariah
Review (2022)
implementation, namely a classical Data used: 2021
Shariah system, mixed system, and
secular system.
It represents perceptions of by
World Bank
(2022)
means the people in a country are
able to give their voice in selecting Data used: 2020
their government, as well as
freedom of expression, freedom
of association, and a free media
(Kaufmann et al., 2010).
World Bank
It measures how the society
(2022)
perceives the quality of the
Data used: 2020
governments in terms of public
services, civil service, policy
implementation, as well as
the trustworthiness of their
commitment to such policies, and
the degree of independency from
political pressures (Kaufmann et
al., 2010).
It captures the perceptions of the
World Bank
extent to which public power is
(2022)
exercised for private gain, including Data used: 2020
both petty and grand forms of
corruption, as well as “capture”
of the state by elites and private
interests (Kaufmann et al., 2010).
It captures the ability to live in a
Global
secure life and free from violence or
Initiative
other related illegal activities that
Against
may be a threat to security.
Transnational
Organized
Crime (2022)
Data used: 2021
It reflects the ability of an economy
SESRIC and
to provide jobs and employs the
World Bank
labor force.
(2022)
Data used: 2019
It is a common tool to measure a
World Bank
country’s development progress.
(2022)
Data used: 2020
It is widely used to measures the
UNDP (2022)
distribution of income among a
Data used: 2019
society. It reflects the disparity of
an economy.

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IV. RESULT AND DISCUSSION
4.1. Country Rankings and Patterns
As previously mentioned, the analysis utilizes the most recent data available
for each country and indicator. For instance, the indicator measuring account
ownership at financial institutions is based on 2021 data, while indicator measuring
employment rate is based on the latest available 2019 data. Table 2 presents the
result of the Ibn Khaldun-based socioeconomic development index (I-SDI) and
its three dimensions. Among 54 Muslim countries considered by the I-SDI,
United Arab Emirates, Qatar, Oman, Malaysia, Maldives, Kuwait, Brunei, and
Bahrain have the highest value of I-SDI. Meanwhile, Tajikistan, Comoros, Yemen,
Afghanistan, Syria, Guinea-Bissau, Chad, Uzbekistan, Sudan, and Turkmenistan
are Muslim countries with the lowest rank of socioeconomic development. Most
countries in the highest rank have good performance in government and institution
dimension and one of the other two dimensions, namely human empowerment
or economic growth. For instance, Malaysia, Maldives, and Kuwait, despite they
may not have a good performance in terms of economic growth dimension, these
countries are in the fourth, fifth, and sixth position of socioeconomic development
successively due to their performance in government and institution, as well as
human empowerment. Qatar and Oman may not be in the top 10 in terms of
human empowerment, but they have very good performance in government
and institution as well as economic growth. Thus, for the final ranking, they
are in the second and third positions. Meanwhile, Brunei has the highest value
of government and institution dimension and is placed in the top 10, despite its
low performance of the economic growth dimension and human empowerment
dimension. It further indicates that human empowerment and economic growth
support socioeconomic development, but government and institution dimension
is considered to play the most crucial role in the socioeconomic development of
Muslim countries.
Furthermore, countries that are in the middle of the I-SDI ranking generally
perform greatly in government and institution, or at least one of the two other
indicators – performances of human empowerment and economic growth, are
in the middle rank. Despite performing poorly in economic growth and human
empowerment, Jordan and Morocco have a good achievement in the government
and institution. Kazakhstan, Indonesia, and Albania may perform abjectly in
terms of government and institution, but these countries show good achievement
in economic growth and human empowerment. At the bottom of the final ranking,
countries generally perform poorly in all dimensions. Cameroon and Tajikistan are
in the middle rank of economic growth dimension and human empowerment, but
they witness a very poorly achievement of government and institution. Meanwhile,
Comoros has a very low value of human empowerment and economic growth,
despite its good performance in the government and institution. Turkmenistan,
Sudan, and Uzbekistan are in the bottom three and perform very poorly in all
dimensions.
In human empowerment dimension, the indicators used are government
expenditure in health, government expenditure in education, access to financial
services, gender equality, and life expectancy. The countries that have the best
achievement are Malaysia, Iran, United Arab Emirates, Maldives, and Kazakhstan,

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while Sudan, Djibouti, Comoros, Guinea-Bissau, and Turkmenistan have the
lowest value in human empowerment. Generally, the countries spend 14% of their
total expenditure on education and 5% of the GDP on the health sector. In the
context of gender equality, most of the countries share the same parity, with the
average score is 0.6. Meanwhile, the average life expectancy at birth is 69 years,
and most of the countries are above the average value. However, many Muslim
countries are considered to have low accessibility to the financial sector. There are
only ten out of 54 countries that have financial account ownership over 70% of
their total adult population. Thus, it is noticeable that the impact of access to the
financial sector greatly increases human empowerment in Muslim countries.
The indicators used for government and institution dimension are Islamic law
implementation, voice and accountability, government effectiveness, control of
corruption, and crime prevalence. The top-ranked countries are Brunei, United Arab
Emirates, Malaysia, Qatar, and Oman, while Guinea-Bissau, Cameroon, Tajikistan,
Turkmenistan, and Chad are at the bottom. As mentioned earlier, the performance
in this dimension has a considerable impact on the overall value of I-SDI and the
final ranking. This result is in line with what has been explained by Chapra (2008)
using Ibn Khaldun’s model of development that political illegitimacy is the trigger
of the decline in Muslim countries. El-Kholei (2019) also mentions that the city
administrators and planners of each region should adopt and apply principles for
good governance, since Ibn Khaldun emphasized the role of good governance in
initiating the development process. High levels of corruption, incompetent and
ineffective government, and low level of freedom of political participation in a
number of Muslim countries gradually interact with other aspects of human beings
in a negative direction and generate a decline. Furthermore, it is found that apart
from implementing the Islamic law either classically by formally incorporating
into the national law or partially in a certain area of national law, the top-ranked
countries also have good performance in government effectiveness and control of
corruption. In terms of criminal prevalence, most of the countries share the same
pattern, with the average score of the criminality index of 0.5. Nevertheless, it is
noteworthy that there is no correlation between Shariah implementation and the
overall value of I-SDI. In some cases, countries under the Shariah system have low
performance in socioeconomic development such as Sudan, Syria, Afghanistan,
and Yemen.
Meanwhile, economic growth dimension consists of three indicators, namely
employment rate, per capita income, and income inequality. Qatar, Kazakhstan,
Mali, Azerbaijan, and Niger perform very greatly in this dimension, while Morocco,
Syria, Lebanon, Comoros, and Iran gain the lowest values. The result shows that
most of the countries placed in the highest level of I-SDI do not position at the
top-rank in economic growth dimension. However, it should not be neglected
that employment rate has a positive link to economic growth in Muslim countries.
Qatar, United Arab Emirates, Kuwait, and Oman achieve the higher level of
employment rate and performs well in socioeconomic development, although
they consider having a low level of GDP growth. Furthermore, the higher level of
income inequality also can be seen in countries with the low level of I-SDI.
It is also important to note that in some countries, there may be incomplete
data for certain indicators within dimensions. As a result, the calculation for each

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sub-indices continues to employ equal weighting for the available indicators.
For instance, countries like Brunei and Suriname do not provide the data on
financial account ownership. Consequently, when calculating the sub-indices for
human empowerment dimension in these countries, only the available indicators
are considered, namely government expenditure on health sector, government
expenditure on education sector, gender equality, and life expectancy. Each
indicator is then weighted 1/12 not 1/15. However, this does not substantially
affect the result of I-SDI. The next section provides the sensitivity and robustness
result when certain indicators are excluded from the calculation.
Table 2.
Muslim Country Rankings According to the I-SDI and Its Dimensions
Country
Code

Country

ARE
QAT
OMN
MYS
MDV
KWT
BRN
BHR
UGA
BGD
KAZ
JOR
SAU
MLI
GMB
ALG
IDN
ALB
MAR
TUN
MRT
SEN
PAK
IRQ
BEN
IRN
BFA
GUY
NGA
EGY

United Arab Emirates
Qatar
Oman
Malaysia
Maldives
Kuwait
Brunei
Bahrain
Uganda
Bangladesh
Kazakhstan
Jordan
Saudi Arabia
Mali
Gambia
Algeria
Indonesia
Albania
Morocco
Tunisia
Mauritania
Senegal
Pakistan
Iraq
Benin
Iran
Burkina Faso
Guyana
Nigeria
Egypt

Human
Empowerment

I-SDI
Value

Rank

Value

Rank

0.60
0.58
0.58
0.57
0.56
0.56
0.55
0.55
0.53
0.53
0.52
0.52
0.51
0.51
0.51
0.51
0.48
0.48
0.48
0.48
0.47
0.47
0.47
0.47
0.47
0.46
0.46
0.46
0.46
0.46

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

0.1641
0.1470
0.1521
0.1692
0.1621
0.1591
0.1314
0.1569
0.1442
0.1398
0.1615
0.1343
0.1561
0.1223
0.1124
0.1367
0.1425
0.1455
0.1349
0.1384
0.1071
0.1432
0.1064
0.1339
0.1308
0.1687
0.1262
0.1364
0.1149
0.1191

3
11
10
1
4
6
28
7
13
17
5
23
8
35
41
20
15
12
22
18
43
14
44
24
29
2
31
21
40
36

Government
and
Institution
Value Rank

Value

Rank

0.2161
0.2053
0.2042
0.2127
0.1984
0.1924
0.2356
0.1898
0.1633
0.1709
0.1236
0.1995
0.1820
0.1678
0.1894
0.1780
0.1253
0.1264
0.1911
0.1469
0.1795
0.1414
0.1621
0.1400
0.1257
0.1483
0.1179
0.1331
0.1528
0.1687

0.2152
0.2310
0.2214
0.1921
0.2021
0.2041
0.1865
0.2042
0.2184
0.2145
0.2319
0.1821
0.1761
0.2219
0.2097
0.1961
0.2168
0.2125
0.1542
0.1928
0.1875
0.1894
0.2036
0.1963
0.2132
0.1472
0.2199
0.1936
0.1925
0.1724

12
3
6
34
24
21
40
20
9
13
2
41
44
5
19
30
11
16
50
32
39
37
22
29
15
53
8
31
33
47

2
4
5
3
7
8
1
10
20
16
35
6
12
18
11
14
34
32
9
25
13
26
21
27
33
24
38
29
23
17

Economic
Growth

Socioeconomic Development in Muslim Countries:
Ibn Khaldun’s Development Model-based Approach

262

Table 2.
Muslim Country Rankings According to the I-SDI and Its Dimensions (Continued)
Country
Code

Country

MOZ
KGZ
AZE
TUR
SLE
NER
TGO
CIV
GIN
CMR
LBN
DJI
SUR
GAB
TJK
COM
YEM
AFG
SYR
GNB
TCD
UZB
SDN
TKM

Mozambique
Kyrgyz Republic
Azerbaijan
Türkiye
Sierra Leone
Niger
Togo
Cote d’Ivoire
Guinea
Cameroon
Lebanon
Djibouti
Suriname
Gabon
Tajikistan
Comoros
Yemen
Afghanistan
Syria
Guinea-Bissau
Chad
Uzbekistan
Sudan
Turkmenistan

Human
Empowerment

I-SDI
Value

Rank

Value

Rank

0.46
0.46
0.45
0.45
0.45
0.44
0.44
0.44
0.43
0.43
0.42
0.42
0.41
0.41
0.41
0.40
0.39
0.39
0.39
0.38
0.38
0.37
0.37
0.36

31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

0.1420
0.1377
0.1231
0.1547
0.1294
0.1063
0.1326
0.1239
0.1151
0.1315
0.1175
0.0793
0.1116
0.1246
0.1326
0.0868
0.0942
0.0956
0.1168
0.0907
0.1028
0.0980
0.0651
0.0922

16
19
34
9
30
45
26
33
39
27
37
53
42
32
25
52
49
48
38
51
46
47
54
50

Government
and
Institution
Value Rank

Value

Rank

0.0968
0.1069
0.1030
0.1085
0.1117
0.1036
0.1025
0.1116
0.1028
0.0843
0.1575
0.1713
0.1295
0.0994
0.0769
0.1668
0.1188
0.1369
0.1182
0.0877
0.0717
0.0948
0.1310
0.0751

0.2210
0.2145
0.2285
0.1911
0.2099
0.2329
0.2017
0.2002
0.2171
0.2111
0.1428
0.1652
0.1728
0.1881
0.1969
0.1505
0.1791
0.1568
0.1517
0.2015
0.2027
0.1811
0.1737
0.1905

7
14
4
35
18
1
25
27
10
17
54
48
46
38
28
52
43
49
51
26
23
42
45
36

48
42
44
41
39
43
46
40
45
51
22
15
31
47
52
19
36
28
37
50
54
49
30
53

Economic
Growth

Source: Author’s calculations

For further analysis, this study classifies these countries into four groups
based on the differences in their socioeconomic development index and gross
national income (GNI) from their means, as illustrated in Figure 1. Following
Giannias et al. (2004), we cluster the countries into high productivity or relatively
high income and high I-SDI (area B), low productivity or relatively low income
and low I-SDI (area C), high amenity or relatively low income and high I-SDI (area
D), low amenity or relatively high income but low I-SDI (area A). As presented
in Table 3, Qatar, United Arab Emirates, Brunei, Kuwait, Saudi Arabia, Bahrain,
Malaysia, Oman, Mauritania, Kazakhstan, Maldives, and Albania are identified
as high productivity countries. At the same time, Azerbaijan, Türkiye, Gabon,
Lebanon, and Turkmenistan are classified as low amenity countries. This result
further indicates that high income does not necessarily reflect a high level of
development. It is a peculiarity that countries such as Türkiye and Azerbaijan who
are categorized as upper-middle-income countries by the World Bank (WESPUN, 2020), but the low development may take place. By referring to the result

263

Journal of Islamic Monetary Economics and Finance, Vol. 9, Number 2, 2023

in Table 2, the countries perform poorly in terms of government and institution.
Notwithstanding they do not implement Islamic law or even the criminality
prevalence is also at the average value, the achievement of other indicators is
very low. The voice and accountability, government effectiveness, and control of
corruption are scored poorly. In other words, the government and institution in the
countries that are classified as low amenity group is pondered to unsuccessfully
promote socioeconomic development by enhancing human empowerment,
providing equal opportunity for the society to work, be productive, and earn
income. Conversely, it is interesting to note that some low-income countries such
as Benin, Uganda, Gambia, and Mali are found to have sizeable I-SDI, along with
a number of lower-middle-income countries such as Indonesia, Tunisia, Morocco,
and Bangladesh. These countries are identified as high amenity groups due to their
good performance in all dimensions. Furthermore, many Muslim countries are still
categorized as low productivity group in terms of their income and I-SDI. Iran,
for example, may perform greatly in human empowerment, but the employment
rate and GDP growth are poor. Despite enjoying a favorable GDP growth, Egypt
still faces several problems in terms of income inequality and unemployment.
This result implies that a number of Muslim countries are still left behind fellow
Muslim countries.
80000.000
QAT

A

B

60000.000

ARE

GNI-MEAN GNI

BRN

40000.000

KWT

SAU
BHR

20000.000

TUR

TKM
GAB LBN

0.000

-0.15

KAZ

OMN
MDV

ALB
IRN
AZE
TUN IDN
EGY IRQ
ALG JOR
UZB
GUY
CIV
MAR
TJK DJI
SYR
KGZNGAPAK
UGA
SEN
SDN GNB
CMR
BEN
AFG COM
MLI BGD
GIN
SLE
BFA
NER
TCD YEM
GMB
TGO
MOZ
SUR

C
-20000.000

MYS
MRT

-0.1

-0.05

0

0.05

D
0.1

0.15

SDI-MEAN SDI

Source: Author’s Data

Figure 1.
The Classification of Muslim Countries by Differences of Their Socioeconomic
Development and Income

Socioeconomic Development in Muslim Countries:
Ibn Khaldun’s Development Model-based Approach

264

To observe the position of Muslim countries with respect to other countries,
this study also strives to measure the I-SDI of ten countries that are considered
to be in the top rank and have the highest value of HDI. The result is presented
in Table 4 and reveals that Norway still achieves the 1st rank, which is equivalent
to the result in HDI. However, it is important to note that the value of their I-SDI
is still above Muslim countries, except the United Arab Emirates. In the human
empowerment dimension, these countries perform greatly in all aspects. Their
government spending in health and education are higher than the average
expenditure in Muslim countries for health and education. The accessibility to the
financial sector represented by account ownership in the bank or other financial
institution is comparatively high, followed by good achievement in gender
equality. People in these countries also are considered to have longer average
life expectancy at birth at 82 years. Still, they also perform very well in terms
of government and institution. The fact that these countries have a strong and
good government is reflected by their highest score in voice and accountability,
government effectiveness, control of corruption, and the low rate of criminality.
Meanwhile, the higher value in economic growth dimension for these countries
is heavily influenced by the low rate of income inequality. Consequently, this
finding denotes that the position of Muslim countries in terms of socioeconomic
development remains behind, even when comparing the high-income Muslim
countries, such as Brunei, Qatar, Kuwait, Oman, Saudi Arabia, and the United
Arab Emirates with other high-income countries.
Table 3.
The Classification of Muslim Countries by Differences of Their Socioeconomic
Development and Income
High Income-High
I-SDI

Qatar, United Arab
Emirates, Brunei,
Kuwait, Saudi Arabia,
Bahrain, Malaysia,
Oman, Mauritania,
Kazakhstan, Maldives,
Albania

Source: Author’s Data

Low Income-High
I-SDI

Iraq, Tunisia, Indonesia,
Algeria, Jordan,
Morocco, Pakistan,
Benin, Senegal, Gambia,
Mali, Bangladesh,
Uganda

High Income-Low
I-SDI

Low Income-Low
I-SDI

Azerbaijan, Türkiye,
Gabon, Lebanon,
Turkmenistan

Egypt, Iran, Guyana,
Nigeria, Kyrgyz
Republic, Burkina
Faso, Mozambique,
Cote d’lvoire, Djibouti,
Cameroon, Togo,
Tajikistan, Comoros,
Yemen, Afghanistan,
Syria, Chad, Uzbekistan,
Guinea, Sudan, Sierra
Leone, Niger, GuineaBissau

265

Journal of Islamic Monetary Economics and Finance, Vol. 9, Number 2, 2023

Table 4.
Ten Country Rankings According to the I-SDI and Its Dimensions
Country
Norway
Finland
Iceland
Denmark
Switzerland
Sweden
Netherlands
Australia
Germany
Singapore
Ireland

HDI
(2019)

I-SDI
Value

Ranking

Value

Ranking

0.64
0.63
0.63
0.63
0.62
0.62
0.61
0.61
0.60
0.59
0.59

1
2
3
4
5
6
7
8
9
10
11

0.957
0.938
0.949
0.940
0.955
0.945
0.944
0.944
0.947
0.938
0.955

1
11
4
10
2
7
8
8
6
11
2

Source: Author’s calculation

4.2. Sensitivity and Robustness
In terms of constructing a composite index, it is essential to conduct sensitivity
and robustness analysis to mitigate the risk of creating meaningless composite
indicators. There are several steps that may be applied to assist in measuring the
robustness of the composite indicators and enhance transparency (OECD, 2008).
However, this study chooses to establish the analysis by omitting three indicators,
namely access to finance, gender equality, and income inequality, considering that
the data are incomplete in some countries. The result for the reconstructed I-SDI
and the initial I-SDI is presented in Table 5. The finding indicates that countries
in the top level of initial I-SDI are not sensitive to the change of indicators.
Regardless of the ranking shift, these countries remain in the top position with
a small difference between the initial ranking and the new ranking. However, a
number of countries such as Türkiye, Iraq, Comoros, Afghanistan, and Uzbekistan
are strongly sensitive to this treatment. Particularly, the average absolute score
of the difference between the initial ranking and the reconstructed ranking is 5.3,
confirming that the changes in rank are not very large – the major alteration is
experienced by Comoros with 21 differences compared to its initial ranking, while
some countries maintain in the same position. Presumably, the alteration to the
higher position is due to the fact that initially, these countries perform very poorly
in excluded indicators, while these indicators are considered to have a great
influence on the dimension. Comoros, Djibouti, Afghanistan, and Uzbekistan have
low accessibility to finance and high-income inequality. Thus, neglecting these
indicators is an advantage for their overall ranking. Türkiye, Kazakhstan and
Albania are considered to have a good performance in these excluded indicators.
Therefore, it gives disadvantage for these countries. Regardless of the sensitivity
result, this study consistently proposes the initial indicators for the final index
of I-SDI based on our justification as presented in Table 1. In addition to this, the
correlation between the initial I-SDI rank and the reconstructed I-SDI rank is found

Socioeconomic Development in Muslim Countries:
Ibn Khaldun’s Development Model-based Approach

266

to be strong. The coefficient correlation is 0.898 and hence the I-SDI is robust. Table
5 shows the result of the difference and rank correlation between the initial I-SDI
and reconstructed I-SDI.
Table 5.
The Rank Differences of Initial I-SDI and Reconstructed I-SDI by Omitting Access
to Finance, Gender Equality, and Income Inequality Indicator
Country
United Arab Emirates
Qatar
Oman
Malaysia
Maldives
Kuwait
Brunei
Bahrain
Uganda
Bangladesh
Kazakhstan
Jordan
Saudi Arabia
Mali
Gambia
Algeria
Indonesia
Albania
Morocco
Tunisia
Mauritania
Senegal
Pakistan
Iraq
Benin
Iran
Burkina Faso
Guyana
Nigeria
Egypt
Mozambique
Kyrgyz Republic
Azerbaijan
Türkiye
Sierra Leone
Niger
Togo
Cote d’Ivoire

Value

I-SDI
Ranking

0.60
0.58
0.58
0.57
0.56
0.56
0.55
0.55
0.53
0.53
0.52
0.52
0.51
0.51
0.51
0.51
0.48
0.48
0.48
0.48
0.47
0.47
0.47
0.47
0.47
0.46
0.46
0.46
0.46
0.46
0.46
0.46
0.45
0.45
0.45
0.44
0.44
0.44

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38

Reconstructed I-SDI
Value
Ranking
0.54
0.54
0.51
0.51
0.49
0.50
0.52
0.49
0.45
0.45
0.42
0.44
0.47
0.45
0.45
0.43
0.42
0.41
0.45
0.42
0.42
0.40
0.42
0.39
0.42
0.41
0.41
0.40
0.39
0.42
0.41
0.39
0.39
0.37
0.40
0.40
0.38
0.37

2
1
5
4
8
6
3
7
11
14
20
15
9
13
12
16
17
27
10
23
19
32
21
40
18
24
26
33
36
22
30
41
37
47
34
31
42
48

Rank Differences
-1
1
-2
0
-3
0
4
1
-2
-4
-9
-3
4
1
3
0
0
-9
9
-3
2
-10
2
-16
7
2
1
-5
-7
8
1
-9
-4
-13
1
5
-5
-10

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Journal of Islamic Monetary Economics and Finance, Vol. 9, Number 2, 2023

Table 5.
The Rank Differences of Initial I-SDI and Reconstructed I-SDI by Omitting Access
to Finance, Gender Equality, and Income Inequality Indicator (Continued)
Country
Guinea
Cameroon
Lebanon
Djibouti
Suriname
Gabon
Tajikistan
Comoros
Yemen
Afghanistan
Syria
Guinea-Bissau
Chad
Uzbekistan
Sudan
Turkmenistan

Value

I-SDI
Ranking

0.43
0.43
0.42
0.42
0.41
0.41
0.41
0.40
0.39
0.39
0.39
0.38
0.38
0.37
0.37
0.36

39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

Reconstructed I-SDI
Value
Ranking
0.38
0.38
0.41
0.41
0.39
0.34
0.34
0.41
0.35
0.39
0.38
0.38
0.34
0.39
0.37
0.35

Rank Differences

44
43
29
28
38
52
53
25
50
35
46
45
54
39
49
51

-5
-3
12
14
5
-8
-8
21
-3
13
3
5
-3
13
4
3

Source: Author’s calculation

Table 6.
Difference and Ranking Correlation Between I-SDI and I-SDI Reconstructed
Ranking Change

Value

Maximum
Minimum
Mean (absolute value)
Standard deviation
Rank correlation

21
-16
5.333
7.121
0.898

Source: Author’s calculation

4.3. Link Between I-SDI and Other Related-Development Measures
The objective of this study is to build an index to measure the socioeconomic
development in Muslim countries based on Ibn Khaldun’s model of development.
To be informative and non-redundant, Branisa et al (2009) suggest conducting an
empirical analysis of its relations with other related indices. Therefore, this section
seeks to identify whether there is a linkage between I-SDI and other variables
as well as the existing measures related to development. This study undertakes
the correlation analysis by adopting the correlation coefficient of 0.70 in absolute
value as the threshold value to differentiate redundancy and non-redundancy as
proposed by McGillivray & White (1993). According to Omar & Sleiman (2021),
three methods of coefficient correlation analysis are widely employed in order
to conduct the sensitivity analysis, namely Pearson’s correlation coefficient,
Spearman’s rank correlation coefficient, and Kendall’s rank correlation coefficient

268

Socioeconomic Development in Muslim Countries:
Ibn Khaldun’s Development Model-based Approach

(Tau-b). However, the latter two are mostly used to estimate the redundancy.
Ultimately, this study decides to utilize Kendall Tau-b for the correlation test. The
result of correlation analysis of Ibn-Khaldun-Based Socioeconomic Development
Index (I-SDI) in respect to other measures are shown in Table 7. This study
further carries out comparison with HDI (UNDP (United Nations Development
Programme, 2020b), Islamicity Index (Askari, 2019), Sustainable Development
Index (Sachs et al., 2020), Multidimensional Poverty Index (UNDP (United Nations
Development Programme, 2020a), and Happiness Index (Helliwell et al., 2020).
The calculation of Kendal Tau-b shows that the value is lower than 0.70 and
statistically significant. Obviously, the I-SDI based on Ibn Khaldun’s model
is linked to these development measures, but it is not redundant. According to
this finding, the absolute value of correlation coefficient between I-SDI and the
Multidimensional Poverty Index is found to be the lowest, while the highest
correlation is observed between I-SDI and Islamicity Index. The correlation
between I-SDI and HDI is sufficiently low with the correlation coefficient of 0.374.
It, therefore, can be inferred that Ibn Khaldun’s model of development-based I-SDI
fundamentally depicts a different picture and covers different aspects in terms of
measuring the development. Also, it certainly gives new information related to the
development in Muslim countries.
Table 7.
The Correlation of Ibn-Khaldun-Based Socioeconomic Development Index (I-SDI)
With Existing Development Measures
Measures
HDI
Islamic City Index
Sustainable Development Index
Multidimensional Poverty Index
Happiness Index

Kendall Tau-b
(Absolute value)

p-value

No. of Obs.

0.374
0.447
0.259
0.135
0.260

0.000
0.000
0.008
0.253
0.016

54
46
52
37
43

Source: Author’s calculation

4.4. Regression Analysis
As for the functionality of the Ibn Khaldun-based socioeconomic development
index (I-SDI), this study further identifies whether this index can act as a driver
for another variable by conducting a linear regression analysis. In this attempt,
the study chooses poverty line (percentage of total population) as the dependent
variable, taking into account that it is widely used to reflect a deprivation in
welfare as the outcome of inability to fulfill the human basic needs, such as health,
education, and housing. Poverty also represents the low living condition of the
people in a nation such as low levels of health and education, low access to electricity
and basic service, poor sanitation, and low access to drinking water. Meanwhile,
other variables such as foreign direct investment (FDI) as the percentage of GDP,
inflation rate, household final consumption in constant 2015 prices (annual
change, %), and unemployment rate are utilized as control variables. The result of
the regression analysis is displayed in Table 8 below.

269

Journal of Islamic Monetary Economics and Finance, Vol. 9, Number 2, 2023

Based on this finding, I-SDI negatively and significantly affects poverty at 1
percent level, confirming that the poverty issue rises due to the substantial decline
of development in various aspects of life in Muslim countries. The coefficient of
determination of the regression model is 0.197, indicating that there could be
some omitted variables from the model. In other words, poverty may be explained
more by other variables that are non-included in the model. While several control
variables have been added to the model, it is not likely to solve the issue. However,
this finding is sufficient to justify that I-SDI based on Ibn Khaldun’s model of
development does measure development.
Table 8.
Regression Analysis Result of I-SDI as Independent Variable
I-SDI
FDI
INF
HHC
UNEMP
Constant
Number of observation
Adjusted R2
Prob > F

Coefficient

Standard Error

T

p-value

-129.884
0.156
0.004
0.215
-0.703
92.504
40
0.197
0.025

45.542
0.537
0.005
0.143
0.418
22.592

-2.852
0.291
0.685
1.507
-11.684
4.090

0.007
0.773
0.498
0.141
0.101
0.000

Source: Author’s calculation

V. CONCLUSION
This study attempts to construct a new measure of socioeconomic development
from the perspective of Islam by implementing the concept of Ibn Khaldun’s
theory of development as interpreted by Chapra (2008). According to Chapra, Ibn
Khaldun’s model is a powerful model to answer some of the most crucial issues in
the rise and fall of the Muslim world and calls it as a multidisciplinary-dynamic
theory of development. In this model, factors such as people (N), development (g)
and justice (j), state (G), Shariah (S), and wealth (W) are considered. Accordingly,
three dimensions are proposed to represent these factors and used to build a
composite index called Ibn Khaldun-based socioeconomic development index
(I-SDI). The first dimension is called human empowerment and it consists
of five indicators. The second dimension is government and institution with
five indicators and the last is economic growth dimension, consisting of three
indicators. The equal-weighted approach is further employed for the scoring
purpose, considering that each dimension and indicators are equally substantial,
while the additive aggregation is employed for aggregation procedure.
Based on the estimation, it is found that Muslim countries that perform
greatly in government and institution dimensions tend to experience a better
socioeconomic development. United Arab Emirates, Qatar, Oman, Malaysia,
Maldives, Kuwait, Brunei, and Bahrain are countries with the highest value of
I-SDI. Together with the great achievement in government and institution,
these countries also perform greatly in at least one of the other two dimensions.

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Socioeconomic Development in Muslim Countries:
Ibn Khaldun’s Development Model-based Approach

Meanwhile, Muslim countries with extremely poor government and institution
are placed in the bottom rank. They have low values in both human empowerment
and economic growth. This result is in line with what has been explained by Chapra
(2008) using Ibn Khaldun’s model of development that political illegitimacy is the
trigger of the decline in Muslim countries. High levels of corruption, incompetent
and ineffective government, and low level of freedom of political participation
in a number of Muslim countries gradually interact with other aspects of human
beings in a negative direction and generate a decline. The result also suggests that
many Muslim countries are still categorized as a low productivity group in terms
of their income and I-SDI. In other words, many Muslim countries are having
low income and achieve low I-SDI. When comparing the result with ten selected
high-ranked countries in HDI, the result also shows that the ranks of all Muslim
countries are positioned below, except the United Arab Emirates. The findings of
this study offer several implications. Of utmost importance is the need to improve
the quality of government or the application of good governance in Muslim
countries, as this study shows that most countries in the highest rank have good
performance in government and institution dimension. Additionally, Muslim
countries should prioritize allocating a considerable portion of their GDP towards
health and education expenditures, given the pivotal role of these indicators in
fostering human empowerment. Furthermore, it is crucial for Muslim countries to
enhance citizen access to financial institution and encourage them to have financial
accounts.
Since the statistical result shows that I-SDI is non-redundant, it is believed
that this proposed composite index delivers additional information regarding the
decline and development in Muslim countries. At the same time, it can be utilized
as an alternative tool for measuring the development in Muslim countries. The
result from the regression analysis indicates that I-SDI negatively and significantly
affects poverty, confirming that poverty may decline when the socioeconomic
development in Muslim countries increases. Ultimately, this result denotes that
Ibn Khaldun’s model of development is exceptionally meaningful in explaining the
performance of an economy in the present day, particularly in Muslim countries.
Therefore, while Muslim countries typically rely on internationally recognized
and standardized frameworks to assess and evaluate the performance of their
countries, as the frameworks provide a common and universally applicable
assessment across countries, the feasibility of utilizing this proposed composite
index as an alternative should be further explored, given its incorporation of
multidisciplinary indicators.
Some limitations of this research are noteworthy. First, the selection of indicators
in each dimension and the equal weighting approach are arbitrary in nature. Thus,
it could sprout bias due to dealing with the information that is statistically difficult to
estimate. Another statistical method of weighting and aggregation may be applied
for further research in order to identify the variables and quantify the weight of
each variable in more detail. Second, it should be noteworthy that omitting some
indicators from the composite index generates shifting in the final ranking. Thus,
it is presumed that the addition of other indicators may also affect the overall
ranking. Further investigation is needed to find out this case. Third, it also may be
more useful to use microdata for some variables to produce a more comprehensive

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composite index of I-SDI. For instance, utilizing microdata of account ownership
or related access to finance data from the Global Findex Database World Bank may
be more fruitful to understand the situation at the individual level.
ACKNOWLEDGEMENT
Special thanks to the Indonesia Endowment Fund for Education (LPDP), Ministry
of Finance, Republic of Indonesia.
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