Pre-Islamic Trade. Before the advent of Islam, a significant commercial culture developed on the basis of agricultural production and trade in the surplus, especially frankincense and other aromatic products such as myrrh and balsam. Other important commodities for local and regional trade included wine, grains, leather goods, and textiles. Writing sometime during the first century C.E., a Greek sailor named Hippalus described the ports of call along the Red Sea and listed these commodities among products a merchant could buy and sell at a profit.

Economic Development under the Khilafahs. After the death of the Prophet Muhammad in 632 and the establishment of the Islamic khilafah, the economy of the growing empire came to depend on three factors. The basic pillar was agricultural production. In fact, most of the areas that the khilafah controlled were rural and agricultural...