Export expansion has a positive effect on economic growth, through increased investment and the expansion of imports, which are essential to improving productivity and increasing economic growth. In turn, economic growth can lead to further export expansion and diversification by increasing the country’s capacity to finance imports used as inputs for export-oriented production, creating cumulative bi-directional causation.
However, the degree to which exports positively affect economic growth and, in turn, further expansion of exports, depends on the categories of exports and imports in which the expansion occurs. For example, reliance on primary exports can impede economic growth, as this category of exports is subject to excessive price fluctuations and does not offer knowledge spillovers to non-export sectors in the way manufactured exports do. In contrast, primary imports can contribute positively to economic growth, as this category of imports can be used as inputs for export-oriented manufacturing production, leading to further export diversification. In the case of a small oil-producing country like Kuwait, the most important question for its economic future is how to foster sustained economic growth as the export demand for oil peaks and begins to decline. This project is intended to inform policy discussions around this question by examining the causal relationships between disaggregated exports, disaggregated imports and economic growth in Kuwait over the period 1980-2018.
- Athanasia Stylianou Kalaitzi, Ahmad Al-Awadhi, Sulayman Al-Qudsi, and Trevor W. Chamberlain. (2023) Export diversification and economic growth in Kuwait: evidence from time series and field survey analyses. LSE Middle East Centre Kuwait Programme Paper Series (16). LSE Middle East Centre, Kuwait Programme, London, UK.
- Athanasia S. Kalaitzi and Trevor W. Chamberlain, 'Manufactured exports, disaggregated imports and economic growth: the case of Kuwait', Economic Change and Restructuring, November 2022.
- 'Time Series Analysis: Stationarity, Cointegration and Vector Autoregressive Models', online workshop organised by the Kuwait Institute for Scientific Research, 4 October 2021.
- Athanasia S. Kalaitzi and Trevor W. Chamberlain, 'Beyond Oil: Have Manufactured Exports and Disaggregated Imports Contributed to Economic Growth in Kuwait?', LSE Middle East Centre blog, 3 August 2021.
- Athanasia S. Kalaitzi, 'Beyond Oil: Have Manufactured Exports and Disaggregated Imports Contributed to Economic Growth in Kuwait?', LSE Middle East Centre workshop on 'Exports, Diversification and Economic Growth in the GCC States', 7-8 June 2021.
- Athanasia S. Kalaitzi and Trevor W. Chamberlain, 'Export Diversification in the Gulf: The Kuwait Experience', International Advances in Economic Research, July 2021.
- Athanasia S. Kalaitzi and Trevor W. Chamberlain, 'Exports, Imports and Economic Growth: New Evidence from Kuwait', LSE Middle East Centre blog, 22 March 2021.
Athanasia is a Research Officer at the LSE Middle East Centre.
Dr Ahmad Al-Awadhi
Ahmad is an an Associate Research Scientist at the Kuwait Institute for Scientific Research.
Dr Sulayman Al-Qudsi
Sulayman is a Principal Research Specialist at the Kuwait Institute for Scientific Research.
Dr Trevor W. Chamberlain
Trevor is Professor and Chair of Finance and Business Economics at McMaster University in Hamilton, Canada.