Impacts of External and Internal Shocks on Hajj & Umrah Economics: Analysis and Theoretical Modelling

Abstract

This research paper aims to initialize a theoretical analysis of the effects of exogenous and endogenous shocks on the economics of Hajj and Umrah. Through the induction methodology of Shariah Makassed analysis and the theoretical modelling approach of the structural autoregressive vector, this paper provides a theoretical study of the devotional visit and presents an explanation of the income fluctuations in the religious visits sector. This modelling allows monitoring the effects of negative structural shocks by considering some variables that affect the income of Umm Al-Qura, in particular, the investment in the religious visits sector affecting the capacity of hotels, the number of visitors, which is influenced by the cost and depending on price index in the Haramayn. Also, they include the expense of all visitors, which depends on the income of visitors from outside and inside the Kingdom. Due to the global epidemic disease Corona 19, the Hajj of 1441 AH (June 2020 AD) documented a small number of only domestic pilgrims, about 10000, while the expected number was about 2.5 million. By using the Shariah Makassed theory in preserving religion, life, money, and justice, and afterwards, by theoretical modelling of structural shocks and their interactions, a clear vision emerges and helps to develop an integrated policy to deal with crises of epidemics and similar risks that affect the life of the any Muslim during his trip from his home to the house of Allah in the Great Mosque of Makkah and to visit the Grand Mosque of Madinah.