Limitations of Kuwait’s Economy: An Absorptive Capacity Perspective

Mohammad Ramadhan, Abdulhameed Hussain, Reem Al-Hajji

.
Techno Economic Division, Kuwait Institute for Scientific Research, Kuwait City, Kuwait.

DOI: 10.4236/me.2013.45043                

Abstract

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.

Keywords

Absorptive Capacity; Kuwait’s Economy; Resource Balance

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	M. Ramadhan, “The Absorptive Capacity of Kuwaiti Economy: Analysis of Size and Determinants,” Journal of the Gulf & Arabian Peninsula Studies, Vol. 31, No. 116, 2005, pp. 11-29.
[2]	W. J. Stevens, “Capital Absorptive Capacity in Developing Countries,” A.W. Sijthoff, Leiden, 1971.
[3]	D. Soliman, “The Kuwait Fund and the Political Economy of Arab Regional Development,” Praeger, New York, 1976.
[4]	M. M. Shirley and P. Walsh, “Public versus Private Ownership: The Current State of the Debate,” World Bank Working Paper 2420, The World Bank, Washington DC, 2001.
[5]	R. El-Mallakh and J. K. Atta, “The Absorptive Capacity of Kuwait,” Lexington Books, Toronto, 1981.
[6]	United Nations Conference of Trade and Development, UNCTAD Handbook of Statistics, 2012.
[7]	M. Metwally, “Causes and Consequences of Wage Differentials in the GCC Countries: A Case Study,” The Middle East Business and Economic Review, Vol. 9, No. 2, 1997, pp. 22-32.
[8]	World Bank, World Development Report, 2001.