Beyond oil: Have manufactured exports and disaggregated imports contributed to economic growth in Kuwait? [Blog post]

This study examines the relationship between manufactured exports, imports, and economic growth in Kuwait over the period 1970–2019. Using a Cobb-Douglas production function augmented with manufactured exports and disaggregated import categories, the analysis employs time series econometric techniques including Johansen cointegration, dynamic OLS, and Granger causality within a vector error correction model (VECM). The findings indicate that while the variables are cointegrated, manufactured exports do not cause economic growth in either the short or long run. Instead, short-run causality runs from economic growth to both primary and manufactured imports, and manufactured exports are found to cause primary imports. In the long run, imports rather than exports are the primary drivers of export diversification. However, export diversification does not, in turn, lead to long-run economic growth. These results suggest that in the Kuwaiti context, export-led growth strategies may be limited in their effectiveness unless accompanied by broader investments in physical and human capital and revised export promotion policies.