Kuwaiti Economy Research Articles

The impact of the tanker war on the Kuwaiti economy 1986-1988

The Kuwaiti economy has suffered a lot as a result of the tanker war. The reason is that Kuwait is an oil state, that is, it is highly greedy for oil, due to its location on the Arabian Gulf and its proximity to the theater of military operations during the Iran-Iraq war. Its beaches and oil trade were unsafe, which negatively affected its economy, especially since the Kuwaiti economy was It depends mainly on oil, which represents 90% of the economy of this Gulf country, especially since agriculture and industry were not of great economic value. As for trade, it was linked to the navigation route in the Arabian Gulf exposed to war risks. The industry was not of great value despite the availability of capital and hands. Working, Kuwait's economy was unilateral, that is, completely dependent on oil. The tanker war affected the Kuwaiti economy greatly, which made Kuwait ask for help from the United States of America to protect its beaches and oil tankers in order to revive its economy.

A Model for Reconstruction the Management Philosophy, Practice, and Organization Structure in Technical and Vocational: The Public Authority for Applied Education and Training, Kuwait

The success of technical and vocational education would depend on several factors among which are: the quality of management, the management adopted philosophy, the organization structure, the quality of workshops and laboratories, the competencies of academic and managerial staff, the level of interactions with related industries, health and safety codes and conducts, and the quality of high school graduates who are interested in joining technical and vocational institutions. However, the quality of management is considered the main dominate in the success or failure of technical and vocational education in producing graduates with the require knowledge, skills, and attitude that are mostly needed by industries. In other word, it is the mentality, philosophy, and practice that is being adopted by the management of technical and vocational education that would determine the quality of the outcomes which would consequently contributes in the reduction of the level of dependence on expatriates particularly in essential sectors of the Kuwaiti economy (e.g., oil, electricity and water, health sector, communications, and navigations). In this paper, a model is introduced to reconstruct the management philosophy, practice, and organization structure at the Public Authority for Applied Education and Training, PAAE&T, Kuwait. The aim is to tackle the weakness of the present management philosophy, practice, and organization structure and proposed instead an effective and efficient management philosophy, practice and organization structure that would enhance the quality of technical and vocational graduates. The outcomes of this paper would significantly contribute in creating a general awareness of the real notion and application of technical and vocational education and the requirements that would, without any doubt, allows a better and efficient utilization of human and material resources in achieving the overall country’s manpower plan.

مركز دراسات البصرة والخليج العربي/ جامعة البصرة

There is no doubt that investment is important in the development and development of infrastructure, represented by various service facilities, power stations, water and sewage networks, and roads. Also, investment in the development of the industrial sector and the increase of sectoral interactions contribute to achieving human development and developing the skills of workers in the various economic sectors. Accordingly, the Kuwaiti economy is one of the most important economies in the regional region in the Middle East, as Kuwait is one of the oil-exporting countries. As the Kuwaiti economy enjoys many prominent components and factors that have contributed to attracting foreign direct investment. The reader should know that most of the natural and mineral resources that exist in Kuwait are exploited through investments, which are characterized by containing huge amounts of these resources, but most of these investments are focused on the oil sector. Therefore, investment contributes to the transfer and localization of advanced technology to Kuwait by attracting foreign investments, especially direct, which the Kuwaiti government seeks to encourage investors to invest through privileges and guarantees offered to investors, as well as the security and political stability that Kuwait enjoys. In addition to providing stimulating policies and procedures to advance the Kuwaiti economic reality. This is what makes the importance of investment in the development of the Kuwaiti economy, which depends in the characteristic of its economy on the export of crude oil.

Diversifying a resource-dependent economy: private\u2013public relationships in the Kuwaiti economy

The Kuwaiti economy is characterized by two major structural imbalances—heavy dependence on oil production and dominance of the public ownership. Kuwait has struggled over the years to implement a two-pronged development strategy —diversifying the country’s economic base away from the oil sector and promoting private sector development. This paper explores the economic impact of some policy reform options currently being considered. It employs a unique set of input–output tables, derived from supply–use tables, that distinguishes transactions made by private and public enterprises as well as providing a matrix of imports by industry. The public–private sector interdependence analysis revealed interesting results regarding sectoral differences in strengths of forward and backward linkages. For instance, the findings indicated that the strength of the publicly owned oil sectors lie in their forward linkages, supplying other sectors with their outputs, but their backward linkages is weak. On the other hand, the chemicals industry is identified as one of a few sectors with balanced and relatively strong forward and backward linkages in both public and private sector. The policy analyses conducted in this paper are highly relevant to the ongoing policy debate in Kuwait over the design of the economic reform programs. The public–private linkage analysis has revealed insights into policy synergies through which one instrument can affect more than one policy target.

INVESTMENT AND SUSTAINABLE ECONOMIC GROWTH: EMPIRICAL PERSPECTIVE ON KUWAIT’S DUAL CHALLENGE DURING THE COVID-19 PANDEMIC AND BEYOND

Endogenous economic growth theories have pointed to private investment as one of the determinants of long run, sustainable economic growth; a well-studied relationship in the development economics literature, both theoretically and empirically. One of the main reasons the Kuwaiti economy has not achieved its aspired degree of economic diversification over decades, is the relatively low level of private investment, which has eventuated in a relatively small private sector, partly due to an unimproved investment ecosystem. Like other economies, investment in Kuwait is a robust growth driver especially as a policy tool to achieve a digital, knowledge-based economy that leapfrogs on innovative technological investments, as ambitiously strategized by the Kuwait Vision 2035. The eruption of the coronavirus pandemic and the deep recession it triggered is likely to become a major hurdle in the way of spurring sufficient quality investments. With contracted GDP and collapsed oil prices, export and fiscal revenues shrink substantially, reducing investment activity and hence negatively affecting investment. This paper focuses on the role of private investment as a function of sustainable economic growth. Specifically, this paper aims to delineate the relationship between investment and economic growth in Kuwait by outlining; the determinants and impediments of investment, investment trends and behavior, innovative models of investment in Kuwait and applying a set of seven simulation-based scenarios of investment modelled as autoregressive distributed lags. By so doing, the paper elucidates the impact of critical variables including; non-oil GDP growth, interest rates management, attracting and fostering FDI inflows, as well as the recession plagued fiscal and trade balances, in order to estimate the magnitude and time-path of key policy variables on investment. The findings illustrate the rigidity of investment when recession drags GDP, FDI, exports and trade balances as well as fiscal revenues.Keywords: Oil Surplus Economy, Kuwait Vision 2035, Diversification, Coronavirus, Simulation, Autoregressive Lag ModeJEL Classifications: C1, C15, F, F01DOI: https://doi.org/10.32479/ijefi.11513

THE STRUCTURE OF THE GDP OF THE KUWAIT ECONOMY

The structure of the gross domestic product of the Kuwaiti economy consists of about 59% of the oil sector during the study period 2006-2019, as the added value of the GDP increased from about 29.6 million Kuwaiti dinars in 1995 to about 39.4 million dinars, with an increase of about 7.8 million dinars. K, with an increase of 26.4% and an annual growth rate of 20%, and the rest of the non-oil sectors of the national economy contribute about 40% of the GDP, which makes the Kuwaiti economy vulnerable to instability and fluctuations. Therefore, planning focuses on sectors that no longer have an activity by returning to take their role in the wheel of development and increasing the contribution of non-oil sectors such as agriculture, manufacturing industries, the financial sector, trade, banking and health by a greater percentage than the current contribution and by overcoming the problems and challenges facing the project as well as directing investments and implementing projects Conclusively, in the non-oil sectors to increase its contribution to production and added value, accelerate performance, improve productivity and employment.

THE FUTURE VISION AND STRATEGIC GOALS SCHEMATIC OF THE STATE OF KUWAIT UNTIL 2035

Kuwait's vision is to transform the State of Kuwait into a financial and commercial center that attracts investment, in which the private sector plays an important role in leading the economic activity, promoting the spirit of competition, raising the efficiency of the production apparatus, achieving balanced development, increasing the contribution of non-oil sectors to the added value of the domestic product, increasing employment opportunities, reducing unemployment and improving opportunities. The social level of the population, through increasing the gross domestic product, raising the standard of living, supporting human development, and leading the private sector for development, by developing the Kuwaiti economy and transforming it into a knowledge economy based on technology, good performance, and the diversification of the Kuwaiti economy. Conclusively, of the previous results that the State of Kuwait is recommended to encourage the private sector in economic development and work on the policy of diversification of innovation

THE TREND OF FOREIGN TRADE STRUCTURE FOR THE KUWAITI ECONOMY

The study shows that exports and exports are from exports and about 92% of exports and exports from exports and exports to exports and exports. References and fluctuations, that the degree of participation is declining, the trend of the dependency rate increases, the trend of the coverage rate, and that the rate of unemployment of the economy tends to decline. Conclusively, from the results of the research, we recommend that the government of the State of Kuwait should increase the internal and external trade movement of the Kuwaiti economy, as well as work to increase exports and imports.

THE EVOLUTION OF THE KUWAITI FOREIGN TRADE STRUCTURE

Kuwaiti foreign trade consists of exports and imports, where exports represent the largest part of the components of trade and that the value of total exports is higher than total imports, and the trade balance achieves a continuous surplus, which increased during the study period 2006-2018 from35billion dollars to about 70 billion dollars, with an annual average of 37 billion Dollars, oil represents about 93.3% of the total value of exports and exports increase at an annual rate of about $ 0.4 billion, while imports increase at an annual rate of about $ 1.6 billion annually, which is a high rate and more than the rate of increase in exports by about 400%, which led to a decline in the surplus in the trade balance. This is because the structure of exports depends on oil, which is affected by the global market in terms of students and world prices, which makes it subject to fluctuations. Agricultural trade in the foreign trade structure represents a percentage that does not exceed 3%, which is low. As for the structure of imports, it showed the continued increase in imports of productive goods, the stability of the ratios of imports of intermediate goods, and the decline in imports of consumer goods. As for the structure of exports, intermediate goods represent about 97% of the structure of exports and this is due to oil, while productive goods are 0.8% and consumer goods 2.4%. Research problem: Given the Kuwaiti economy’s dependence on the foreign trade sector to provide the cash and foreign currency resources needed for the various sectors and to provide food, and that the foreign trade sector depends on oil by about 93%, foreign trade is the financier of development and it is subject to fluctuations in the oil market, which affects the surplus rates of foreign trade Hence, it is necessary to make good use of the resources that achieve the provision of different commodities for the population. The study recommends diversifying production so that exports are diversified and not depend on a source only for export. Research objective : To study the structure of foreign trade in terms of: 1- Exports structure and development during the study period 2001-2018. 2- The import structure evolved . 3- The development of the foreign trade balance and the size of the surplus. 4- Examine the structure of exports by use. 5- Study the structure of imports by use. Research method: The research used statistical methods and general chronological trend equations to measure the development of both exports and imports, averages, ratios and some economic indicators. Conclusively, it notes the development of foreign trade and the change of its structure. Therefore, the research recommends continuing to change the structure and diversify it and reduce dependence on oil so that it is not exposed to income fluctuations and to ensure its stability.

Hospital Managers’ Perceptions Regarding Setting Healthcare Priorities in Kuwait

BACKGROUND & OBJECTIVE: In view of the budget limitations resulting from the downturn in the Kuwaiti economy, it is crucial to evaluate the process of priority setting within the health system to identify strengths and weaknesses of this process within both the public and private sectors. Once the weak points are identified, policy makers can work with hospital administration staff to upgrade the process with the aim of utilising health resources more efficiently. The purpose of this study is to give decision makers some insight on the perspective of hospital managers regarding the current process of priority setting, and suggest ways to improve this process. Additionally, this study will provide the opinions of hospital managers in questioning the effect of certain healthcare policies, currently given top priority, on healthcare system efficiency. The views of the hospital managers interviewed indicate their preferences in priority setting and the changes in health spending they believe are required.
 
 METHODS: A qualitative study was conducted using semi-structured, face-to-face interviews with 14 managers from public and private hospitals in Kuwait. Content analysis was used to produce major themes and sub-themes from the interview transcripts.
 
 RESULTS: While several similarities and differences in the priority-setting process between the public and private sectors were apparent, the main strength in the process that most managers from both sectors mentioned, was that it was simple, systematic, comprehensive and democratic. The several weaknesses of the process include it not being evidence-based due to the lack of accurate and up-to-date data. Also, the discrepancy between the official statements made and the actual practices of health decision makers in the country demonstrate the confusion around the priority-setting process. Most respondents, from both sectors, thought that the availability of a clear and well-communicated national health strategic plan would facilitate the necessary modifications in legislative, structural and administrative strategies to streamline the processes of allocating resources and setting priorities. For example, most respondents believed that the disadvantages of the costly practice of sending patients abroad for treatment and its effect on resource allocation outweighed its advantages. Further, the managers from both sectors had different perceptions regarding the policy of private health insurance for retirees. These two policies, according to some hospital managers, added strain to the health budget and undermined trust in the public-health sector.
 
 CONCLUSION: This study examined the perspective of hospital managers regarding the process of healthcare priority setting in Kuwait, and ways to improve it. Priority setting could be improved by having a better understanding of its strengths and weaknesses. The study concludes that health decision makers should remain responsible for accepting and implementing evidence-based, systematic processes of resource allocation. Additionally, continuous monitoring and evaluation of the impact of health policies will be required to improve overall health outcomes.        

Diagnosing the curse of natural resources in Kuwait

PurposeThe purpose of this paper is to empirically examine the phenomenon of natural resource curse in an oil abundant economy of Kuwait. The study estimates a behavioral equilibrium exchange rate model for Kuwait during the period 1980-2014 to assess the impact of prices and productivity factors on real effective exchange rate.Design/methodology/approachIt uses time series econometric techniques, such as unit root tests, Johansen cointegration test, Vector Error Correction Model, and Impulse Response Function, to estimate the model.FindingsUnlike the results of the few other studies, the empirical results show a significant impact of the variables, such as balance of trade, economic growth, oil exports, interest rate, and inflation rate, on real effective exchange rate appreciation which indicates the existence of Dutch disease within the Kuwaiti economy. Similarly, the comparative analysis between changes in public expenditure and inflation rate shows the existence of Dutch disease in Kuwait during specific periods of time.Originality/valueNatural resource curse or Dutch disease is a widely recognized phenomenon affecting the balance of economic activities in natural resource abundant countries. Symptoms of Dutch disease are perceived in several changes in the economy, particularly on price level, sectorial productivity, employment, and aggregate demand which in the long run worsen the country’s economic position and lower its international competitiveness. Dutch disease is not only a feature of natural resource abundant economies, but also can affect any economy with excessive revenue generating sector or high capital inflows which appreciates country’s exchange rate. However, the examination of Dutch disease in the economy is more important when investigating the impact on oil-producing countries (Apergis et al. 2014; Mohammadi and Jahan-Parvar, 2012; Jahan-Parvar and Mohammadi, 2011). Therefore, scholars studying Dutch disease phenomenon pay greater attention to cases of Dutch disease among oil-producing countries (i.e. Arezki and Ismail, 2013; Van der Ploeg and Venables, 2013; Jahan-Parvar, 2012; Cologni and Manera, 2013).

The dynamics and determinants of Kuwait's long-run economic growth

This paper develops a quarterly macro-econometric model for the Kuwaiti economy estimated over the period 1979Q2–2013Q1, allowing us to investigate the long-run role of oil income in the development of Kuwait as well as the direct effects of oil revenue, foreign output, and equity price shocks on real output. More specifically, we examine to what extent Kuwaiti real output in the long run is shaped by oil revenue through its impact on capital accumulation, and technological transfers through foreign output. Using the same modelling strategy we also explore the role of oil income in terms of long-run private and public sector output growth (separately). The estimates suggest that real domestic output in the long run is influenced by oil revenues and foreign output (a proxy for technological progress), and technological growth in Kuwait is on a par with the rest of the world. Furthermore, while we show that both oil revenues and foreign output drive growth in the public sector, it seems that technological progress is the main (and only) driver for private sector real growth. Finally, our results show that oil revenue and global equity market shocks have a large and significant long-run impact on Kuwait's real output and public sector GDP. In comparison, the effects of the foreign output shock is muted.

A Comparative Analysis of Selected Sectors of The Kuwaiti Economy

A Comparative Analysis of Selected Sectors of The Kuwaiti Economy

Abnormal Returns to Shareholders of M&A Participating Firms: Evidence from the Kuwaiti Stock Market

Mergers and Acquisitions (M&A) continue to occur in the world of business, albeit in waves similar to cycles. As such, M&A have remained a research interest for academics as well as practitioners. While there is convergence among researchers toward finding positive abnormal returns accrued to target firm shareholders, returns to shareholders of acquiring firms remain a question of debate and conflicting evidence. This study attempts to examine the wealth effects of acquisitions in the Kuwaiti economy for the shareholders of both, acquiring and target firms, during the period of 2004-2009. The event study methodology is used to examine whether there were positive or negative returns accruing to the shareholders of the participating firms around the announcement of the acquisition in the cases of 43 acquiring firms and 30 target firms.

The Validity of the Purchasing Power Parity Hypothesis for Kuwait

Many studies have tested the null hypothesis of the unit root of the real exchange rate to examine the validity of the purchasing power parity (PPP) hypothesis. Previous studies have reached different conclusions regarding that issue. This study tests the hypothesis of PPP in Kuwait using two tests of unit roots, the Augmented Dickey Fuller (ADF) and Phillips Perron (PP) tests. Using monthly data from 2006 to 2015, both tests reject the PPP hypothesis for the Kuwaiti economy. Using the components of the real exchange rate, we find that the levels of prices in both Kuwait and the US are not moving together to provide stationarity for the real exchange rate. This result could be attributed to the large increases in the prices of the housing and food and beverages sectors in Kuwait during that time.

‘Between the devil of the desert and the deep blue sea’: re-orienting Kuwait, c.1900–1940

This article examines the place of two environmental regimes – the desert and the sea – in the history of Kuwait before oil. Historians have long approached Kuwait through its maritime past, foregrounding its connections around the Persian Gulf and across the Indian Ocean. This article shifts the emphasis, arguing that in the early twentieth century Kuwait faced westwards across the desert as much as it did across the sea. It takes this possibility as an opportunity to revisit a set of assumptions about the shape of the pre-oil Kuwaiti economy, the structure of its politics, and the nature of its position within a wider British Empire. In all three, the interwar years in particular witnessed a loosening of Kuwait's maritime bonds and a turn to the desert: an orientation which helped the state survive the difficult years preceding the coming of oil revenues.In part, this act of re-orientation seeks to advance our knowledge of Kuwait before oil, a period and place still neglected by many commentators and scholars. But it also forms part of a wider concern to treat 'empty' desert and steppe 'spaces' as arenas of activity in their own right, capable of exerting significant influence on the polities around them. More broadly, then, Kuwait provides an excellent place to test the power and reach of desert dynamics, and to explore the interplay between maritime and desert influences in global history.

Limitations of Kuwait’s Economy: An Absorptive Capacity Perspective

This paper aims to examine the absorptive capacity of Kuwait’s economy over the period (1970-2010). The paper will expand on the analytical framework to estimate the absorptive capacity of the Kuwaiti economy developed previously by the main author. The absorptive capacity of the Kuwaiti economy has been increasing steadily over the years. Domestic absorption depicted a slow growth pattern during the period 1970-2000. However, it has accelerated significantly over the last decade rising by almost three fold from $29.1 bil in 2001 to $82.2 bil in 2010. However, the constant positive resource balance and the excess of foreign exchange earnings indicate the limitations of the economy absorptive capacity. The paper highlights the main constraints that limit the ability of the Kuwaiti economy to absorb resources and provide few policy recommendations that should help in increasing the absorptive capacity in long run.

CRM in the Banking Sector

The aim of this paper is to evaluate the practices of customer relationship management (CRM) strategy implementation in the Gulf Banking sector, contextualizing with Kuwait. There is broad consensus in the literature that improving and enhancing the relationship with customers is imperative and a determinant factor to gaining competitive edge in the marketplace. The financial sector in general, particularly the banking sector, has taken on a pro-active role in the Kuwaiti economy and, accordingly, susceptible to wide-ranging reforms which are profoundly impacting sector-specific competitive tactics and strategies. This study provides a preliminary evaluation of the evolutionary trends of CRM strategy implementation through a developed model, the antecedents and consequences in relation to competitive positioning/repositioning of organizations in the Kuwaiti banking sector.

Fiscal Policy Responses to Oil Price Volatility in an Oil-Based Economy

Oil prices increased from 2004 to historic highs in mid-2008 but have fallen precipitously since then. What are the effects of this volatility on an oil-based economy like Kuwait? This article examines options for policy responses from an oil-based economy perspective. The impact of changes in domestic tax and subsidy policies on the Kuwaiti economy is estimated using a computable general equilibrium (CGE) model. Results show that for a set of scenarios aimed at raising government savings via tax increases or subsidy cuts, the least negative impact on household welfare is for the subsidy-reducing scenario, a reflection of efficiency gains due to reduced price distortions. The most negative effects follow from raising government savings via increases in price-distorting import tariffs and the introduction of a nonuniform value-added tax (VAT). Given the small share of non-oil activities in Kuwait’s non-oil gross domestic product (GDP), the introduction of the VAT on non-oil activities does not generate a significant increase in government revenues.

Investigating Stock Price Dynamics in an Oil-Dependent Economy: The Case Of Kuwait

The recent literature on stock markets has used modem time series techniques such as cointegration and causality to identify macroeconomic variables that cause stock index movements. But this type of investigation has to a large extent remained confined to markets belonging to well developed and diversified economies. Motivated by the lack of set-ups involving stock markets from economies with different profiles, this paper concentrates on the Kuwaiti stock market whose unique features as an oil-dependent economy render its investigation a useful exercise. Based on mutivariate time-series techniques and using monthly data spanning the period September 1992 to December 1998, the investigation reveals three important factors that are believed to have long-term equilibrium effects on stock market prices in Kuwait. Oil prices, U.S. interest rates and real estate prices are found to form a cointegrating relationship with stock prices. The results in this paper indicate clearly a sharp contrast in terms of stock market dynamics between an oil-dependent economy like Kuwait’s and those of highly diversified economies. It is argued that the reported results are nevertheless logical in light of the unique features of the oil-dependent Kuwaiti economy.