Kuwait is one of the world’s leading exporters of oil and much of its economy is reliant on oil wealth. Petroleum accounts for nearly half of GDP, 95% of export revenues, and 80% of government income. Ever-increasing oil prices since 2003 have helped build Kuwait’s budget and trade surpluses, and foreign reserves have added to the amount of capital investment and have made Kuwait one of the fastest growing economies in the region. Furthermore, government regulatory quality is high, in the indicators compiled by the World Bank, providing a stable framework for further growth. This achievement in deregulation is reflected in very low costs for starting a business.
However the government’s aim of reducing Kuwait’s dependence on oil through economic diversification has slowed as a result of the current oil boom. Other sectors of the economy include shipping, construction and financial services, although high-tech exports are notably lacking. Scores for commercialisation of innovation are, in general, low.
With its oil revenue priced in US dollars, Kuwait decided in 2007 to change its currency peg from the US dollar to a basket of currencies in order to curb inflation, and to reduce its vulnerability to external shocks. These measures have likely adversely affected its competitiveness score, which is based on movements in relative price levels. However, more positively, mass education levels are extremely high, with an average of five years of secondary education per worker.
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Kuwait is a tax-free, high income country with a well-developed, modern infrastructure and a comprehensive welfare system funded by oil reserves. Unemployment is very low at 1.3% and the labour force is extremely fluid. Almost half of this small Gulf nation’s population is made up of foreigners, and non-Kuwaitis represent about 80% of the labour force. A further key driver of life satisfaction is the contentment of 94%g of Kuwait’s population with their personal health.
The structure of government restrains political freedoms, and the formation of political parties is in practice blocked, although not expressly forbidden by law. Furthermore, the government passed laws in 2005-06 that restrict the freedom of speech, and religious freedoms are similarly restricted.
Oil wealth has created opportunities. Massive inward migration reflects this, as does a general optimism in the population about the potential to get ahead through hard work, according to the Gallup World Poll. However, this does not extend to gender equity. Prior to 2005, women did not have the right to vote and no parliamentary seats are held by women.
Many immigrants from South and Southeast Asia work in domestic or low-skilled jobs, but are often subjected to poor conditions. At nearly 50 hours a week, working hours are extremely long and leisure time is correspondingly low at 2.67g hours a day. As a desert nation, Kuwait suffers from extreme heat in the summer, to a degree that may be detrimental to wellbeing. Kuwaitis express satisfaction with efforts to preserve the environment, although this is tempered by dissatisfaction with air quality.
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