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

Abstract

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 e¤ects of oil revenue, foreign output, and equity price shocks on real output. More speci…cally, 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 in ‡uenced 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 signi…cant long-run impact on Kuwait's real output and public sector GDP. In comparison, the e¤ects of the foreign output shock is muted.

Cooptation in Practice: Measuring Legislative Opposition in an Authoritarian Regime

“…Like other Gulf states, Kuwait has constructed a welfare state in which the government is responsible for a vast amount of social programming directed at citizens (El-Katiri et al 2013). This spending closely tracks income: Eltony & Al-Awadi ( 2001) and Burney et al (2018) find evidence that government expenditures are a function of oil revenues. From 1993-2015, annual government expenditures averaged 84% of oil revenues in a given year.…”

The US oil supply revolution and the global economy

“…While it is no surprise that MENA oil exporters are affected negatively by lower oil prices, the overall long-term output effect for MENA oil importers is not clear cut 28 See Burney et al (2018) for an extensive discussion. 29 For more details on oil price shocks and macroeconomic policy in resource-rich MENA countries, see, for instance, the planned edited volume "Institutions and Macroeconomic Policies in Resource-Rich Economies" (which is the outcome of an ERF funded research project) and the papers from the ERF project "Institutional Requirements for Optimal Monetary Policy in the Resource-Dependent Arab Economies" lead by Bassem Kamar.…”