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Volume :2 Issue : 7 1976      Add To Cart                                                                    Download

INDUSTRIAL DEVELOPMENT IN KUWAIT

Auther : By: Dr. Aabdul-EIlah Abu-Ayyash

 

 Despite the fact that Kuwait is considered an arid area, the major economic activities of its people could not be described as nomadic.  The orientation of the people’s activities was toward the sea.  Fishing and pearling were basic industries for a large number of Kuwaitis.  There also used to be an industry for shipbuilding, which was based on old – fashion methods.  The people of Kuwait did not lack industrial knowledge no matter how simple it happened to be.  What they lacked basically was sufficient resources, which could have helped them develop their industrial activities.   The tribal structure, which has characterized the life of the Kuwaiti people did not negate that fact that most of them were engaged in urban activities such as trade, shipbuilding, pearling and fishing.

  Industrial activities were confined to simple forms of products.  The industrial sector could not be developed without sufficient natural resources upon which industrial growth depends.  In addition, industrialization depends on several other fundamental factors such as investments, capital, skilled labor, and markets.  The discovery of oil in Kuwait was a turning point not only for industrial development but also for all aspects of economic life in the country.  Oil, as both raw material and a source of energy, brought increasing wealth to the Kuwaiti treasury. Oil revenues provided surplus in capital and the ability to invest.  Oil wealth attracted skilled and unskilled labor from neighboring countries.  The population size increased.  This factor associated with the increasing average of individual annual income and the improvement of living standards created a suitable consumption market.  These conditions led to the creation of an atmosphere for industrial growth and development.

  However, it was until 1965 that the government started to take serious steps towards industrializing Kuwait.  Before that date, industrial development depended on trial and error and lacked incentives and seriousness from the private sector.  A five-year plan, which started in 1967, was drawn to develop all economic activities in Kuwait including industry.  The plan allocated 86 million (K.D.) for industrial development.  The invested amount was divided between public and private sectors to encourage the expansion of industry at all levels.

  In addition, the government took steps to stimulate industrial activities.  The industrial development committee recommended in 1965 for the Council of Ministers to exempt all industrial establishments for a period of ten years from all forms of taxes.  The privileges included the exemption from custom duties of all imported equipments used by industrial firms.  The major industries that developed first were those related to oil and gas production such as mining and oil refining and petrochemical processing.  Revenues from oil production increased in the period between 1946 and 1975 from less than Two million (K.D.) to about Two Thousand million (K.D.).

  In the area of petrochemical, the value of exported materials from this economic activity reached 78 million (K.D.) in 1974.  Other industrial activities that are related to mining are quarrying materials.  This industry grew rapidly as a response to increasing demand on housing facilities, which became urgent after the sudden increase in population size and the standards of living.  This industrial sector employed more than 8000 workers which constituted almost one-third of the labor force in all industrial sectors.

  The industrial sector of food – processing which includes fishing is another important part of the manufacturing structure in Kuwait.  The activities related to this sector also increased in terms of the number of employed workers, the allocated investments, and production.

  The spatial distribution of industrial activities shows that most industries are concentrated in Kuwait and Ahmadi governorates along-side the coastal line.  Hawalli governorate has the smallest number of industrial activities, which indicates that the major activities seem to be related to commercial and service sectors.  It has been estimated that the city of Kuwait has the highest percentage of people engaged in industrial activities, which amounted to about 16% of the total population.  The geographical distribution of workers shows different spatial patterns between Kuwaiti and non-Kuwaiti workers.  In general, the percentage of Kuwaiti workers in industrial activities is much less than non-Kuwaitis.  For example, Kuwaitis employed in industrial activities constituted 15% of the total number of employees.  The lowest percentage of Kuwaitis working in industrial activities is found in the city of Kuwait.  It is about six percent of the total labor force in industry.  On the other hand, the highest concentration of Kuwaitis in industrial activities is found in Ahmadi governorate.  This area had about 21 per cent of its industrial labor force from the Kuwaitis.

  In short, research on the growth and development of industry in Kuwait faces some difficulties.  Despite the availability of statistics related to industrial activities, the data are for a short period.  This does not allow the researcher to come to reliable conclusions.  In other words, prediction will be based on insufficient number of years.  Another difficulty, which faces researchers, is the lack of standardized data, which could be used for reliable comparison.  For example, definitions that are related to several aspects of industrial activities, classification of data and categorizing or establishments lack consistency.  In addition, the available statistics rarely includes geographical and spatial elements, which are highly important in locational analysis.  Accordingly, there is an urgent need for extensive field research in this area and other related activities.

  However, the fact remains that Kuwait has achieved impressive progress in developing its natural resources and its efforts to industrialize itself.

 

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