ABSTRACT
This study explores how pesantren (Islamic boarding schools in Indonesia) develop sustainable economic initiatives aligned with their educational and social missions using a capability approach. A qualitative research methodology, combining library and field research, was employed. The findings reveal that three dimensions of the capability approach—freedom, justice, and functioning—explain the rapid economic development of Pesantren Walisongo Ngabar. First, economic activities initiated and managed by the pesantren, such as establishing sustainable businesses, creating employment opportunities, and providing skills training, contribute significantly to the well-being of both individuals and the broader pesantren community. Second, pesantren equip students with access to resources and capacity-building opportunities, empowering them to make autonomous economic choices and achieve their financial goals. Third, justice, rooted in Islamic ethical principles, fosters social harmony, reduces inequalities, and ensures equal access to educational and economic opportunities for all members of the pesantren community. Additionally, collaboration with surrounding communities strengthens sustainable economic development efforts. The capability approach offers a comprehensive framework for assessing and advancing sustainable economic initiatives in pesantren, emphasising equity, empowerment, and long-term impact.
