Does Halal Industry Impact Economic Growth? An Empirical Evidence from Muslim Countries in Asia

Authors

Mohamad Soleh Nurzaman, Strategic and Global Study Departement, University of IndonesiaFollow

Abstract

Purpose - This study examines the impact of the halal industry on economic growth in Muslim-majority countries, particularly in Asia, home to most of the global Muslim population.

Design/methodology/approach - Using a quantitative approach, this study applies panel data regression based on neoclassical growth theory. It analyses data from 2015 to 2022, using the Global Islamic Economy Indicator to measure the halal industry’s development. Economic growth is represented by constant GDP per capita, with foreign direct investment, inflation, and population growth as control variables.

Findings - The results show that the halal food sector has a significant positive effect on economic growth, indicating its potential as a key driver of economic development. In contrast, the halal pharmaceuticals and cosmetics sector exhibit a negative impact, suggesting challenges such as dependency on imported raw materials and high certification costs. Other sectors, including Islamic finance, halal tourism, and halal media, do not show a statistically significant effect on economic growth.

Implications - The findings underscore the importance of strengthening the halal food industry as a key contributor to economic prosperity in Muslim-majority nations. Additionally, policymakers must address structural barriers in the halal pharmaceuticals and cosmetics sector, including supply chain dependencies and regulatory inefficiencies.

Originality/value - Unlike previous research that mostly relies on qualitative approach, this study examines the halal industry's economic impact using panel data regression. The findings provide valuable insights for governments, industry stakeholders, and researchers on the sector's role in global economic growth.

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Recommended Citation

Nurzaman, Mohamad Soleh (2025) "Does Halal Industry Impact Economic Growth? An Empirical Evidence from Muslim Countries in Asia," International Journal of Islamic Economics and Business Sustainability (IJIEBS): Vol. 1: Iss. 1, Article 2.
Available at: https://scholarhub.ui.ac.id/ijiebs/vol1/iss1/2