Hedging as a Survival Strategy for Small States: The Case of Kuwait

Telci, İsmail Numan; Rakipoglu, Mehmet

doi:10.20991/allazimuth.960945

Cited by 1 publication

(1 citation statement)

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“…What is not clear is whether these relationships hold for an economy heavily dependent on a single output: in the case of Kuwait, oil. Kuwait is widely viewed as the most oil-dependent nation among GCC states, if not the world, and, within the Gulf region, the country that has made the least progress toward economic diversification (Ellis 2021;Telci and Rakipoglu 2021). This is in spite of the fact that, following a report prepared by former British prime minister Tony Blair in 2010, Kuwait embarked on an economic and social development plan known as Kuwait Vision 2035.…”

Section: Introductionmentioning

confidence: 99%

Manufactured exports, disaggregated imports and economic growth: the case of Kuwait

Kalaitzi

Chamberlain

2022

Econ Change Restruct

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This study investigates whether manufactured exports contribute to economic growth and whether imports can augment the role of exports in fostering export diversification. In the case of the latter, the study also examines which categories of imports are most likely to facilitate economic growth in the long run. In particular, the study focuses on the case of Kuwait over the period 1970–2019 and utilizes a Cobb–Douglas production function augmented with manufactured exports and primary and manufactured imports. The long-run relationships between the model variables are explored using two cointegration tests, namely the Johansen test and the dynamic ordinary least squares. The short-run causality is investigated utilizing the multivariate Granger approach in a vector autoregressive model, the parameters of which are assessed for stability using the CUSUM of squares test and recursive residuals plots. To examine the causal relationships in the long run, the Toda and Yamamoto test is applied. The cointegration tests show that the variables are cointegrated, while the Granger causality test shows that manufactured exports and disaggregated imports, together with the inputs of production, cause economic growth in the short run, which, in turn, leads to import growth. In the long run, the expansion of both primary and manufactured imports drives export diversification, whereas manufactured exports do not contribute to economic growth. These findings are very important for Kuwait’s policymakers to consider in their plans to implement Kuwait Vision 2035 as overseas demand for oil wanes.

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Section: Introductionmentioning

confidence: 99%