TITLE:
Limitations of Kuwait’s Economy: An Absorptive Capacity Perspective
AUTHORS:
Mohammad Ramadhan, Abdulhameed Hussain, Reem Al-Hajji
KEYWORDS:
Absorptive Capacity; Kuwait’s Economy; Resource Balance
JOURNAL NAME:
Modern Economy,
Vol.4 No.5,
May
31,
2013
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.