Social Welfare Provision within an Integrated Three-Sector Economic Framework

Abstract

Despite its apparent contributions to social welfare, the third sector is still not properly recognised and integrated into mainstream macroeconomic models and statistics. With the aim of enhancing social welfare in Muslim economies, this article firstly seeks to conceptualise an integrated framework of social welfare provision within a three-sector economy. This article uses an integrative review and synthesis of Western and Islamic literatures on the concept and experience of the third sector and social welfare provision and subsequently presents a modified circular flow model that represents a comprehensive social welfare provision framework that actively involves all economic sectors, including the third sector which is largely neglected in traditional macroeconomic framework. Secondly, this article proposes the establishment of an Islamic Third Sector Commission (ITSC) as a tool to enhance efficiency of resource allocation and social welfare provision. It represents a systematic approach to identify priority areas, assess their needs, and allocate resources accordingly, promoting greater efficiency, transparency, and effectiveness in social welfare provision. In sum, this article offers conceptual framework and practical tools that have the potential to enhance the well-being of individuals and communities, while also promoting collaboration and synergy among economic sectors. This integrated approach accentuates the fundamental values of cooperation, solidarity, and justice which are at the core of Islamic economic principles.