Exports, imports and economic growth: new evidence from Kuwait

This paper investigates whether manufactured exports have been a key driver of Kuwait's economic growth and identifies which categories of imports have contributed most to export diversification and growth. Using data from the LSE Kuwait Programme, the study finds that manufactured exports, along with primary and manufactured imports, domestic investment, and human capital, have contributed to Kuwait’s economic growth in the short run. However, long-run analysis reveals that economic growth does not stem from manufactured exports; instead, causality runs from imports to manufactured exports, suggesting that import-driven diversification supports long-term trade development. These findings highlight the limitations of relying on aggregate trade measures and suggest the need to identify specific manufactured export categories that could sustain growth as global demand for oil declines.