Abstract

The case of Kuwait illustrates that development as an economic phenomenon cannot be fully understood without reference to demographic determinants. Kuwait, like other Gulf oil-exporting states, is strongly dependent on foreign labor both qualitatively and quantitatively, but is attempting to nationalize the labor force and orient the national economy toward autonomous growth. 47% of Kuwait's population is under 15 years old, and the economic activity rate of only 19.4% is the lowest of any Arab country. Female participation increased from 2.5% in 1965 to 13.3% at present. 20 years ago, 70% of the labor force was Kuwaiti, but in 1980, 78% of workers were foreign although foreigners represented only 60% of the total population. Beginning in 1978, immigration was viewed much less favorably in Kuwait and the process of Kuwaitization, or replacing foreign workers with Kuwaiti nationals, was begun. An analysis of the labor force in terms of stocks and flows as well as of the structure of employment and productivity in the context of Kuwait's economic growth indicates that constraints in labor force growth will vary in intensity depending on the policies adopted; foreign workers could be admitted but not their family members, foreign workers could be replaced by nationals whenever possible, a higher labor force participation rate among nationals could be promoted, population growth could be encouraged, a more highly qualified native labor force could be trained, or a more capital intensive technology could be imported to reduce dependence on foreign workers. With a total fertility rate around 7.0, it is difficult to envision a significantly increased fertility level in Kuwait, and the fertility level in fact will probably decline under pressure of modernization. The crude death rate of 4.6/1000 in 1982 is also very low. Nationalization of the labor force implies a significant loss of productivity, since the government is maintaining a policy of providing jobs for all nationals regardless of their qualifications. Although development of Kuwaiti manpower is a longterm policy, the Kuwaitization of the labor force is erroneously viewed as a shortterm objective. Kuwaitis are underrepresented in technical jobs requiring university training in science and mathematics, and in skilled and semiskilled manual jobs. An educational reform permitting Kuwait to respond to future labor force needs will be required. Nonparticipation of women effectively reduces the economically active group by 1/2, and retirement at age 45 also aggravates labor shortages. Simulation exercises indicate that Kuwait must rely on foreign labor for many years to come. It appears that substitution of local for foreign workers will be at the price of lowered productivity and slower economic development. Naturalization of some foreign workers might help solve the problem, but for reasons of political stability almost no foreigners except unskilled Beduin Arabs receive Kuwaiti citizenship.

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