Economy

Pre-oil Era

Kuwaitis were mainly affected with two environmental elements; the sea and the desert, which played a great role in forming the old Kuwaiti habits and traditions, in addition to affecting the social and economic structure of the country. The professions of diving for pearls and trade were the most prominent in the past, followed by fishing as a source of income in Kuwait before the discovery of oil. However, the financial and economic return of such activities was limited, and the methods and tools used in fishing were rather very primitive. On the other hand, the ship building profession prospered during that era, with a daily activity of departing ships in journeys that last for months, and arriving ships filled with goods imported from ports of India, Africa, Yemen and Oman, in addition to the ships transferring fresh waters from Basra. However, this profession witnessed great deterioration in the beginning of the fifties with the appearance of steam ships equipped with engines, and the stoppage of Kuwaiti sailors to travel on board sailing ships, in addition to the discovery of oil in large quantities.

History of Kuwait Currency

The first currency used in Kuwait was of a strange form, and was called “Twailat Al-Hasa”. It was in use since the settlement of Al-Sabah Family in Kuwait and for the period of about 50 years. The first attempt to issue a national currency was during the reign of the fifth ruler Sheikh Abdullah Bin Sabah 1866-1892, who ordered a new currency to be minted as an expression of sovereignty. The value of the new currency was one “rupee”. Since it was manually minted, it had an irregular shape. Several hundred of this currency were introduced to the market, but its usage lasted only for a few months before it stopped due to the strength of the rupee and the non-existence of any gold coverage to support it. On 19 October 1960 the Kuwaiti Cash law No. (41) was issued to regulate the new Kuwaiti currency, which is the Kuwaiti Dinar. Indian rupees were shortly withdrawn from Kuwait and returned to the government of India, and the usage of Kuwaiti Dinar commenced as of the first of April 1961.

The Discovery of Oil

The signs of discovering the first oil field in Kuwait were in Burgan area on the twenty second of February 1938. The company owning the concession had to temporarily fill the well due to difficulty of controlling it.

On the 30th of June 1946, Sheikh Ahmed Al-Jaber Al-Sabah turned the silver wheel to inaugurate the export of the first shipment of Kuwaiti crude oil, which flowed flawlessly to the tanker. Along the next three decades, major developments took place. Kuwait Oil Company commenced the processes of oil refining in Al-Ahmadi port refinery in 1949. Kuwait Oil Tanker Company was established in 1957, while Kuwait National Petroleum Company was established in 1960, followed by Kuwait Petrochemical Company in 1963. The next year witnessed the commencement of manufacturing oil extracts. Kuwait nationalized oil industry in 1975 to launch a very important historical era.

Kuwait Economy

The economy of the State of Kuwait is considered to be a small economy which is relatively open. It is mostly controlled by the governmental sector. The state-owned oil industry represents 50% of Gross Domestic Product (GDP), 95% of exports, and 80% of governmental revenues. Crude oil reserve in Kuwait represents 10% of world reserve.

Kuwait oil exports are represented in crude oil, oil products, liquefied petroleum gas, chemical fertilizers, salt and chlorine.

Water resources are very scarce in Kuwait due to the desert nature of the country. Therefore, Kuwait does not have any agricultural lands, which prevents any development of the agricultural sector. Actually, the major part of the production of this sector is fish, cattle, and pearls.

Kuwait depends on several other sectors that play a considerable role in elevating the economy of the country, including the banking and financial sector, which covers local banks, Islamic local banks, foreign banks subject to the control of the Central bank of Kuwait, the investment sector, Kuwait Stock Exchange, the industrial sector, the services sector and some other sectors that humbly participate in the GDP, like wholesale trade, retail trade and real estate, etc.

The Economic Role of Kuwait at the Arab and Global Arena

The Kuwait Fund for Arab Economic Development was established in 1961 as a Kuwaiti organization concerned with providing and managing financial and technical aid to developing countries. The Activity of the fund was confined to providing economic assistance to Arab countries till 1974, after which it extended to cover all the countries of the developing world.

Most of the fund projects were in the fields of agriculture, irrigation, transportation, communication, power, industry, water and sanitary. Social fields were later added, including educational and health constructions.

Kuwait also adopted the first Arab economic summit on the 19th of January 2009 under the title of “The Arab Economic Developmental and Social Summit”, which aimed at enhancing economic integration among Arab countries and completing the elements of the Arab Common Market.

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