Kuwait-University-Journal-of-Law-header
Search
Journal of Law

Previous Issues

Advance Search
Year : From To Vol
Issue Discipline:
Author

Volume :20 Issue : 77 1995      Add To Cart                                                                    Download

INDUSTRIAL ECONOMIC GROWTH AND TARIFF: THEORETICAL AND PRACTICAL ANALYSIS OF THE KUWAITI CASE

Auther : By: Dr. Ahmed Al-Kawaz

This paper intends to focus on quantifying the potential relationships between industrial rate of growth (in terms of import substitution ratio), tariff rate and profit margin with application to the case of Kuwait.

To do so the first four sections are devoted to prepare the theoretical background for the addressed topic. According to section one, the introduction concerns with providing a brief survey of the main arguments on tariff as means of protection, section two and three, embrace the peculiarities of tariff within the framework of the Kuwaiti economy. Whereas, section four discusses the theoretical treatment of tariff in case of small country. In this respect two criteria are distinguished, i.e. mill and bitable criterion, as necessary and sufficient conditions to achieve the state of efficient protection. Section five is assigned to quantify the relationships between industrial rate of growth (proxies by import substitutions ratio), tariff rate and profit margin. A certain formula was used to the calculate import substitution ratio whereby the value of industrial outputs and total supplies in the base and target years were considered. Sector–specific and profit rates were taken from the industrial bank of Kuwait statistics.

Section six lists a set of reservations that have to be taken into accounts before any economic analysis can be materialized. Against this background, section seven explains the inconsistencies of some economic findings. In this respect several factors are mentioned. First, is the modest impact of trade policy instruments (proxies by tariff rate) on activating the Kuwaiti industrial rate of growth. Second, the missing of other explanatory variables could have exercised a negative role on the process of regression analysis. These variables may include the subsidized rate of interest, land electricity and other services. Third, due to some market distortions, the coefficients of profit margin are not reflecting the right signs. Fourth, the dominance of idle capacities in many industrial projects could have participated in disturbing some estimates.

To conclude, it is advisable to run the analysis covered by this paper on a project level. This will avoid the aggregation problems and help in reaching a project-specific package that will facilitate working out much more reliable industrial policy. One of the urgent prerequisites to handle this type of analysis is to have an open access to the main explanatory variables, industrial growth and for a long time series.

Journal of Law
Journal of Law

You are Visitor No.

75417

Journal of Law
Journal of Law
Tell your friendsJournal of Law
Journal of Law

Last Updated

May 18, 2017

Journal of Law
Journal of Law
Journal of Law

Please enter your email Here to receive our news

Journal of Law