The Role of Zakat in Achieving Economic and Social Development in Indonesia 10.35781/1637-000-164-007

Abstract

Abstract

This research aims to analyze and evaluate the role of Zakat in achieving economic and social development in Indonesia, using a descriptive-analytical approach. The research reached several conclusions, most notably that the Zakat institution possesses enormous, untapped potential to be an effective tool for improving welfare indicators at both economic and social levels. Zakat in Indonesia has successfully transitioned from its traditional role of charity to one of developmental empowerment, contributing significantly to economic development, poverty alleviation, support for education and health, and the strengthening of social cohesion and disaster management. The study demonstrated that Zakat has a statistically significant positive impact on economic growth in Indonesia through consumption channels, productive investment, and social stability. Furthermore, the social impact of Zakat is enhanced when it is directed towards productive and sustainable projects rather than temporary consumer aid, thus transforming beneficiaries into productive members of society. However, the gap between potential and collection, along with challenges related to institutional coordination and technological infrastructure, remain major obstacles to achieving optimal social impact.

Keywords: Zakat, Development, Economic Development, Social Development.