Every country in the world knows that in order for it to sustain itself o=in the business world, it has got to engage in business with other states. International trade is a platform that allows countries from all over the world to exchange their goods and services with one another in an effort to promote each other’s economy as well as the global economy. The importation and exportation business also allows the countries to have good relations as they help the different citizens from all over the world to participate and interact with each other. Kuwait has not been left behind in this booming business world. The country has engaged itself in the importation and exportation sector and has thus set a name for itself in the business world. In this paper, I will examine the economy of Kuwait as well as the trade it engages in with the rest of the world in a bid to keep up with the changing economic times.
Kuwait is situated at the north-western end of the Gulf. The country is bordered in the north by Iraq. In the south, it is bordered by Saudi Arabia. It also has a maritime border with Iran. The land area is approximately 18,000 KMs. This approximately is a quarter of the size of Tasmania. Kuwait City was founded in the early 18th century. The country became an autonomous sheikhdom in 1756. During this period, it was under its very first ruler Sheikh Sabah bin Jabir. Sheikh Sabah was the founder of the Al-Sabah dynasty. This dynasty is still ruling Kuwait to the present day. Just like many of his descendents, Sheikh Sabah was a renowned entrepreneur. He encouraged the development of entrepôt trade through Kuwait.
This was done along one of the principal trade routes that were present between India, East Africa and the eastern Mediterranean. The development of the country’s commerce and industry is largely attributed to the huge involvement of the Al-Sabahs. All the members of this large family are involved in all the aspects of the nation’s life. This ranges from business to all the professions and coordinated via the government administration. The ruling family, both the men and women, is made up of individuals who are very educated. Many of them have degrees from Cambridge, Harvard, Oxford and the Sorbonne.
From back in the mid-18th Century, Kuwait has been recognized as a trading hub. It’s described as being a centre for the world pearl trade. It continued to thrive through the 19th Century. By the turn of the last century, the country had got in its possession some 500 vessels which were dedicated to pearling. The rising interest from the Ottoman Turks in the wealth of Kuwait drove Emir Mubarak Al-Sabah (Mubarak the Great) to agree to sign a treaty with Britain in 1899. It then became a British protectorate (IMF, 2010). Kuwait’s mythical riches were cut short in the 1920s and 1930s by local insurrections. Because of this, the pearl trade was destroyed by the introduction of the Japanese cultured pearls onto the world market. This put Kuwait’s booming business to s slow down. However, the Anglo-American Kuwait Oil Company was later founded in 1934. It made its first major strike in the Burgan oil field in the year 1938.
The start of the World War II delayed the large-scale development of Kuwait’s oil industry. However, Kuwait made its first oil shipment in 1946. In 1961, Kuwait became fully independent of Britain. In the 1970s, Kuwait nationalized the Kuwait Oil Company. Once again it had the privileges of having enormous prosperity. This was until the Souk Al-Manakh stock market crash in the year 1982. This happened following a speculative boom which gave the Al-Manakh market the third-highest stock market capitalization in the entire world. The market implosion happened t the same time as that when there was a collapse in the world price of oil. During the 1980s, Kuwait helped Iraq to finance its war with Iran, but at the end of the war resisted Iraq’s request to forgive many billions of dollars in war loans. Quite a number of other disagreements, mostly involving shared oil reserves, were also part of the relationship. In August 1990 Iraq invaded and annexed Kuwait. The occupation lasted till February 1991, when a US-led coalition forced the Iraqis back behind their borders.
The Government of Kuwait
Kuwait is a constitutional monarchy. According to the constitution of the country, succession is only limited to male members of the Al-Sabah family. These have got to be direct descendants of Mubarak the Great. Kuwait was the first Arab country in the Gulf to have an elected parliament. The National Assembly, commonly known as the Majlis Al-Umma was comprised of 50 elected members. These members were chosen every four years by elections. Women were treated equally and given the right to vote in elections. The executive branch of government is council of Ministers that advises and assists the Prime Minister in the performance of his duties. Ministers also have membership of the National Assembly, although their numbers in this parliament are restricted to 16, over and above the 50 elected members. The monarch appoints the Prime Minister, who in turn appoints the cabinet. Kuwait is a member of the Gulf Cooperation Council (GCC), which also includes
Bahrain, Oman, Qatar, the United Arab Emirates (UAE) and Saudi Arabia. Kuwait is also a member of:
• The Arab League.
• The International Labor Organization (ILO).
• The Organization of the Islamic Conference (OIC).
• The Organization of Petroleum Exporting Countries (OPEC).
• The World Trade Organization (WTO).
• The United Nations (UN) and its various agencies.
Just like to Saudi Arabia, this country is a major aid donor. It is active in the World Bank and the International Monetary Fund (IMF). Together with supporting humanitarian and development programs through the Kuwait Red Crescent, the country also offers aid to Fund for Arab Economic Development and a number of various other agencies. This government has invested so much in education and social services. It has got a comprehensive state welfare system. This system has created a very literate society which is full of admirable public health facilities.
International Trade: A Kuwait and Arab Perspective
In the modern age, national comparative advantage stretches way beyond endowment of resources. The technological achievements together with other factors like organization of production and the relations that go on in the labor management have had a fair influence to the movement of goods and services between countries that engage in trade. However, these same factors have led to the division of the trade between the well developed countries and those that are less developed. This is the case between the North and the South countries of the gulf. Because of this division in trade, the South majorly deals with exportation of raw material that is extracted from within the country. The North on the other hand has concentrated on the export of manufactured goods. The North has also concentrated on the exportation of food supplies to the less developed countries (Ministry of Finance and National Economy, 2004).
Despite the disagreements when it comes to the flow of trade, the exportation business has boomed in the gulf region. The total exports have increased by huge margin of 61 percent per five years. The developments of exchange rates as well as the development in the exportation sector by emergence of new exporting countries in East Asia have had a huge impact on this trade. The industrial countries have increased their importation rates thus booming the business. Also responsible for this large growth in the importation and exportation sector in international growth is the expansion of the world trade economy in the past decade. However, a lot of overturn in interests occurred in the major economies. A shift in the balance of trade especially in Japan, Germany and the United States happened between them and the oil exporting countries. This countries and states have shifted their interest away from oil to the manufactured goods and services in the industrialized countries.
Quite a number of the developing countries have made it possible for themselves to drift away from the common concentration on the exportation of the raw materials. They have since become major exporters of the manufactured goods. These countries are majorly those that have adopted a market economy. They make use of their comparative advantage in the organizing production as well as cost competition. Factors like exchange rate policies and the import policies are part of those that have had a huge influence in the expansion of these countries on the export industry.
The currency composition of trade has also been a vital shift in the international trade. The United States dollar has made its role in trade finance very broad over the last decades. It has thus overtime become the all time predominant currency in international trade. Notably, the dollar has got a unit pricing for crude oil. Thus, as a means for the payment for acquisition of crude oil it has enhanced its role in international trade finance.
In the Gulf, business is booming. This is not just in the oil sector. The economies of Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates have been having reforms take place. These reforms are to advocate for the private sector growth. They encourage these countries to diversify away from just the business of oil and go trading internationally. In as much as the oil sector remains the dominant revenue sector in the building of the economy, the money that is being gene rated is being channeled into developing other economic projects. This has helped in the development of new sectors in the trade industry that enables these countries to go trading with the rest of the world in a diversified field of business. This has drawn a lot of interest into these countries by the entire world. In this report, I am going to study the economies of these five countries found in the gulf with special emphasis on the economy of Kuwait and just how it engages in trade with the rest of the world (Ministry of Finance and National Economy, 2004).
Bahrain, Kuwait, Oman, Qatar and United Arab Emirates have got a total population of about ten million people. The economies of these five countries have got a combined GDP of close to 170 billion US dollars. In the recent years, there has been a lot of significant growth in these countries economic wise. These countries are still dependent very heavily on the oil sector. The gulf harbors some of the richest oil reserves in the whole world and these have played a very vital role in building up the economy of these countries. However, a majority of them have now engaged in the diversification of the revenue generating businesses. The governments in these countries have realized the importance of doing so and thus other new industries are being encouraged. The new sectors are mainly comprised of those in the service industry with the likes of tourism and financial services topping the charts.
Despite this, the countries still face a number of challenges. As a result of the fluctuating oil prices, it has been difficult to maintain a stable economy. This has been the even more reason for the diversification into the international trade. The dominant source for the investment funds still remains to be the oil and gas revenues. Thus, the downturns in the oil prices affect everything else and hence determine the growth of these dependant sectors. However, these countries have taken up the challenge and the services sectors have picked up and are now dominant in the international trade and part of the biggest revenue generators in the whole world. Many would ask then, just how did these countries respond to the challenges that they faced?
Responding to the challenges
The governments have been looking back into how much they influence the economic growth in their countries. As a key tool to the improvisation of the private sector, it is important to note that all these five countries have embraced the essence of privatization in varying extents. The restrictions that had been put on the foreign investments are being relaxed just a little. This is being done to give more room to allow even greater levels of foreign ownership. Foreigners are now able to buy themselves real estates in these countries. The numbers of taxes that target specific companies owned by foreign agencies compared to the local companies are being reviewed. This is being done to allow even more investments into these countries.
Promoting businesses within the region is also another way that the government promoted the generation of revenue. Regional integration is being encouraged in order to make these dream a reality. The Gulf Cooperation Council has been in the frontline in the promotion of the development of a regional market. Currently, it has already achieved having a common external tariff which is about five percent. However, this has got quite a number of exemptions. It has also got a set goal of coming up with a monetary union by the year 2013. The GCC has gone out of its way to strive for the removal of barriers which limit regional trade in the region. These regulations are being harmonized and with time it is expected that there will be full integration.
Even though these reforms are taking place in an effort by the governments to promote both regional and international trade in the gulf, quite a number of obstacles still remain. The most prevalent obstacles include import licensing, product standards and government procurements. These are just the common obstacles among the rest which include business dispute resolution processes, national citizen employment quotas and the remaining foreign investment restrictions and agency laws.
The Economic Overview
• The economies of Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates have achieved impressive growth in recent years. This is attributed to the high oil prices and strengthening non-oil sectors.
• The oil revenues are still the biggest contributors to the economic growth. Oil is the primary export. It is also the main source of government revenue in all five economies. This includes the more diversified economies of Bahrain and the United Arab Emirates.
• Many economies in the region are reaping huge benefits from the emergence of gas as a substitute fuel. Qatar has got the single largest non-associated gas field in the world. It has also got plans to become the world’s biggest exporter of liquefied natural gas.
• The development has also spread to the Non-oil sectors. The services sector continues to be a large booming sector. Tourism, real estate and financial services are all showing strong expansion in the business world. The face of the region continues to change dramatically as construction of new projects takes place every day.
• The government has invested a lot of time and energy in each one of these economies. Its involvement remains very strong. In the recent years, governments have acted as the primary employer of their nationals they have been the major source of investment for business.
• The diversification away from oil has become a key priority for all of the five governments. Governments are out there for looking for the growth and development pathways which will in the end become less reliant on its initiatives funded by unstable oil revenues.
• The population growth in this gulf region is rated as being among the highest in the whole world. This has thus resulted in a young population. Nearly half of the total population is aged just below 30.
• A major challenge faces the Gulf States in terms of the job opportunities present. As the majority of the numbers of their nationals reach the working age, there aren’t enough working opportunities for all of them. Thus, majority of them end up being unemployed. Even though the total employment is still on the rise, the expatriates, who make up around 90 per cent of the total workforce in the United Arab Emirates, are principally in the frontline of benefiting from this employment growth.
Economic Trends in Kuwait
Kuwait is a major oil exporter. It is ranked around tenth in global terms. Oil and gas support a range of associated industries. These include the refining, petrochemicals, cement and fertilizer production. Kuwait has got an approximate number of oil reserves of about 101 billion barrels. This is close to 10 percent of world reserves. In 2008, it was estimated to be pumping on average around 2.5 million barrels per day, compared with Saudi figures of 8.8 million barrels per day. The total UAE figures are around 2.5 million barrels per day. There are five government-controlled enterprises which have got a very important role when it comes to Kuwait’s economic performance. Many organizations are state-owned. Privatization has not been as rapid as in other GCC countries. Subsidies apply to a range of goods and services. These include electricity supply and a range of consumer goods and basic building materials. The move to privatize Kuwait Airways in 2009 look like they have slowed as a result of the global financial crunch of late 2008. The sale of a third mobile phone license has however proceeded. The service is to be provided by the Saudi Telecom Company (STC).
Business Monitor International provides even better detailed information of the privatization moves. They do this and also provide a report of the Kuwaiti business environment as compared to that of the other GCC members. Similar to its fellow GCC members, Kuwait has reaped from record high oil prices. This happened during 2008 and it boosted the government revenue to a great extent. The non-oil income contributes to just 6% of the total government revenue. However, Kuwait has got a relevant amount of income from its substantial offshore investments. The government expenditure in the 2006-07 financial year was US$36 billion. This is close to one third of the country’s GDP. This expenditure showed represented a 50% raise on the previous year. This shift and increase in expenditure was as a result of the funding a number of public projects. These included public infrastructure, as well as enhanced education and health services.
Kuwait suffers from significant power shortages. There are and plans to build four new plants. This will cost the government US$27 billion on electricity infrastructure between 2008 and 2012. This huge sum is so as to cope also with an anticipated growth in demand. Kuwait detached itself from the US dollar in 2007. The Kuwaiti dinar is now valued against a wide range of currencies. Inflation has gone up. This raise is in synchrony with the inflationary trends in the region. It is however less than that in some other GCC member states. There are subsidies that have been given by the Kuwait Government. These are to be used to acquire a variety of basic items that are meant to assist in the limitation and balancing of the pressure. The Kuwait real estate sector has also been seen to be on the frontline ion the expansion and realization of very strong growth. The cost of land has gone up increased four to five times since they year2003. As a result, there have been very high rentals for the citizens of this country. The rise in the cost of living has hit the disposable incomes of the large expatriate workforce most particularly.
Foreign trade in Kuwait
In 2007, the total exports from Kuwait were estimated to be at US$62.8 billion. Of these figure, 95% of it was generated from crude oil and refined products. A total of six Imports of estimated US$16.7 billion were calculated to have been for the same period by the IMF. These imports covered a wide range of products and services. They also covered notably automobiles, foodstuffs and inputs forthe oil and petroleum industry. In the second half of the year 2008, Kuwait’s economy was affected a lot by the global crisis. The decline in the oil prices really affected Kuwait and its place in the international trade sector. The problem became even more serious as there was the intensification of the liquidity shortages in the worldwide markets. This happened after the Lehman’s collapse. The development of the oil markets had got a direct influence on the flow of the government finances. Despite this, they also had a direct impact on the co-operate sector as well as the financial sector liquidity. These events in 2008 caused a steep fall in Kuwait’s economy and thus their participation in the international trade.
The real GDP was estimated to have gone down by close to 4.5 percent in the year 2009. This was by far the weakest performance of all time by the GCC countries. The real oil GDP dropped by more than 10%. The non-real oil GDP on the other hand is approximated to have stayed still on the scale. The flat scale in the non0real oil sector symbolized less activity in the financial and construction sectors. The country witnessed lower domestic demand and a drop in the import prices by a margin of close to 12%. Thus, this reduced the consumer price inflation to about 4%. The equity prices also continued to fall. The growth of money slowed and the credit growth dropped. This was as a result of the low demand and the banks strove to avoid risks in giving out money (National Bank of Kuwait, 2008).
The financial sector was also not spared in this crisis. The investment companies in particular witnesses a lot of pressure in their funds as they watched their asses quality drop by the day. The investment companies which had got had got more dependence on external financing suffered a lot of losses in the year 2008-2009. This made them face a lot of difficulty in settling their debts. Five of the Investment companies defaulted in the year 2009 and 2010. The non financial corporate sector dropped very highly because of this fall in the equity prices.
The drop in the oil prices affected the entire economy in Kuwait
Given the connections that Kuwait has got in the international trade and the financial linkages, the global financial crisis was a very big blow to the economy of this country. The crisis played a very significant role in the determination of the direction that the economy of this country was to take. The year 2009 was when the impact was hugely felt. The real GDP contracted as the asset prices came down thus causing everything in the market to depreciate. Both the fiscal and the external surpluses became increasingly narrowed. There was a huge fall in the profits as witnessed in both the financial sectors and the non-financial sectors. The growth of the credit slowed down very much and very minimal businesses were taking place. The financial system however remained stable and this was because of the swift policy actions by the authorities (National Bank of Kuwait, 2008). The credit growth and the non-oil activity were not doing do well in the market because of the lack of the fiscal stimulus. This was also caused partly by the little utilization of the financial stability law.
Despite all this challenges in the Kuwait economy, the economic outlook is very positive. It is expected that Kuwait will be able to rebound back to its position and be able to grow steadily. This growth will continue as to go on as the global recovery pushes for the demand for oil. The government of Kuwait is also in the process of putting in place the four year development plan. This will start with an expanded budget to cater for the new expenditures in 2010/2011. The end of financial year balances and the current account balances are being looked at as having the possibility of remaining stable and certainly improve in the coming years. This is based on the fact that the investments income and the oil recipients are anticipated to recover economically too.
The financial sector on the other hand does not show early signs of recovering. It is expected to continue facing the challenges from before as the market continues to be unstable. The rising NPLs as well as the large concentrations in the portfolio of the banks are a major source of concern. Despite this, the there are still signs that the banking sector is has got enough money (Popescu & Mustafa, 2006). The sector is highly liquid and this should be able to help the sector remain stable even as the whole business world crumbles. The challenges that are facing the investment sector on the other hand are going to be even more extensive and a change cannot be expected any time soon.
The outcome of the economies in Kuwait as well as the rest of the world cannot be predicted in for the year 2011 and forward. The stress tests that have been carried out indicate clearly that the banking system could without a doubt withstand the economic meltdowns going on throughout the world. Even thought there are quite a number of banks that seem to be vulnerable to what is going on, the investment companies are the ones which look like they will be affected most should there be any further damage. The real estate sectors as well as the industrial companies will have prolonged vulnerability and are most likely to experience a slow growth in their businesses. However, this will not be the case if at all Kuwait can learn how to limit nits expenditures and keep them within a controllable limit.
There is the suggestion of the implementation of the growth agenda. Although it is being proposed as one of the major ways of saving the economy, this agenda will require a progress in the structural reforms. There will be the need to push forth for the implementation of a number of recent laws. These are the capital market law,., the labor law and the privatization law. If these laws are fully implemented, there will be the provision of a fair platform for the growth of this country to be implemented (Popescu & Mustafa, 2006). With the measures proposed above, the country can look forward to a better economic future and a better position in the international trade. However, this is not going to be an easy road for this country. In as much as Kuwait is going to put in all its efforts in a bid to contest for their recovery, other factors beyond their reach may still cause them to remain in an economic crisis. This is because they will not be able to control what goes on in the other parts of the world and they have got to rely on the other countries to also make an effort in uplifting the world economy.
Trade and the Arab World
In its entire history, the Arab world has been greatly dependant on trade for the survival of its economy. In the various periods, the allocation of resources as well as the degree of economic development has ensured an important role for external trade in the economic history of the Arab region. In the build up to this platform, four major factors can be identified. The first is that the Arab region acts as a bridge between three major continents. These are Europe, Asia, and Africa. This region has represented one of the top significant trade routes in the history of business world. The second factor if that the Arab region at a certain period of history was the developed part of the world. Therefore, a lot of the manufactured goods in this period were exported from the Arab World. These were taken to other parts of the world.
The third factor is based in the more recent history. The region’s natural and geographic resources have really contributed in the generation of revenue for the region in its participation in international trade. Without a doubt, Oil is the most important natural resource of the area. The Suez Canal is a clear indication of the importance of the region’s geography development of the economy of the world. The fourth and last factor is the tradition of free trade. Thus, there has been an adherence to an unobstructed market economy in the entire history of most Arab countries
A very unique feature about the Arabic region and its conduct in trade is the external commerce. This region outsources trade from the outside world. However, the trade between the Arabic countries has still represented a portion of the trade in the region, though with a small percentage. A clear example of this is that in the recent years, the exports of products that are being done between the Arab countries have not exceeded 8% of the total products being traded. On the other hand, the importation of goods within the Arab countries has only gotten to a maximum of 8.4 % (Baier & Bergstrand, 2008). This imbalance has been caused by the allocation of resources and distribution of products. The regional economic activity has been concentrated on services. The extraction of Raw materials and the low technology in manufacturing has also been increased. The demand for the manufactured goods as well as food items has been covered for by the industrial countries.
The Arab countries have been classified in to four major trade groups. These are:
Kuwait is a member of the Gulf Cooperation Council. This trade group represents the most open and also the greatest dependant on the trade sector for economy in the Arab region. Kuwait has overtime been seeking stabilization of its economy by engaging itself in diversification of its economic base. By expansion into the downstream oil activities in the various parts of the world, this country has been able to boost its economy to great levels.
The Northern Arab countries trade group is comprised of Syria, Lebanon, Jordan, Iraq and to some extent Egypt. These country members are known for their large populations and the medium levels of capital income. This trade group is however not the very best with regards to openness. The Southern Arabian Peninsula and East Africa is a trade group comprised of the low income countries. These countries are characterized by low income earnings and low economies. The Arab Countries of North Africa is a trade group that has in its tradition had strong relations with the countries of the southern part of Europe. The member countries of this trade group however have got very negligible relations when it comes to the rest of the Arab World.
Even though the little inter-Arab trade is highly because of the poor allocation of resources and the low degree of development, another fact for this result is that there has been very minimal serious commitment in a bid to promote this kind of trade in the last couple of years (Baier & Bergstrand, 2008). Over the past two years, the organizations that finance this inter-Arab trade, with special regard to the Arab Monetary Fund, have linked up with the Arab central banks to come up with a strategy that will enable the financing of this inter-Arab trade. Such efforts prove to be very handy in the cases where the economic fundamentals seem to keep up the inter-Arab trade. However, despite all these efforts put in making the inter-Arab trade a success, these Arab countries still rely heavily on the importation of manufactured gods. These manufactured goods come into these countries from the industrial countries.
A Kuwait Perspective on Trade
In the economic life of Kuwait, foreign trade has always been a very vital element. In the era of pre-oil, Kuwait came up with a regional trade center. This was based on its geographical location and the large fleet that it had in its possession of the pearl-diving and trading ships. The Second World War without a doubt resulted in a prolongation of the interruption of trade in this region. However, the trade of oil export started in 1947. This fundamentally caused a shift in the structure of the foreign trade in Kuwait. Indeed, it is fair to say that this actually transformed the whole of Kuwait’s economy (Central Bank of the United Arab Emirates, 2008). Oil has formed about 90% of the total export of Kuwait in international trade. This exportation of oil has resulted in an alteration of Kuwait’s imports also. The Increase in the revenue generated from the oil sector has boosted the economy of this country. The country now boasts of a very high consumer purchasing power and a rush by every citizen to build efficient buildings and infrastructure for the development of the country. Thus, the demand for the consumer as well as the capital goods has grown very fast.
In the recent years, the country’s economy has been concentrated in three regions with concern to the foreign trade. Europe, Asia and North America are the three regions. Trade in this region has been limited with the Arab countries. In the earlier years, the total imports of goods and services had gone down steadily (Baier & Bergstrand, 2008). However, there has been a significant increase towards 1987. In the year 1989, the total revenue from these imports is estimated to have gone up to 23 billion US dollars. This was a huge rise compared to the 19.8 billion US dollar figure in the year 1987. The share of the United States dollar in its involvement in the financing of this country’s imports just shows how much influence the dollar has on the world trade. This United States dollar has accounted for 70% of the total trade in Kuwait. The United Stated dollar is currently the most predominant currency in the export sector in this country. Foreign trade has been Kuwait’s lifeline. In 1989, the statistics indicated that the ratio of the country’s exports to the GNP was 36%. The ratio of the imports to GNP was 20% (Budd & Wilson, 2010).
Prior to the Iraqi invasion, Kuwait had started to resume its role as a regional trade and financial center. In the trade sector, the country introduced measures in the early 1990. These measures were to facilitate the imports and exports in the country. The invasion of Iraqi and the subsequent occupation contributed to the instant termination of the external trade in Kuwait. The infrastructure has been destroyed with serious damage being done to the ports and the storage buildings. The exact extent is not however known. Because of this, in the future if there are any plans of restoring Kuwait there may be the creation of bottle necks. However, because of the requirements when it comes to the reconstruction, these ports and the storage facilities may not receive priority. The severe damage of the infrastructure in Kuwait may result in the import and export sector being affected.
The increase in the imports of consumer goods is expected to have a gradual path. As the population starts to come back to the country, the purchasing power goes on the rise. This is as a result of the expansion of activities. Despite all its challenges, there are a number of factors that are for sure set to ensure that Kuwait goes back to its traditional role as a regional financial and trade center (Central Bank of the United Arab Emirates, 2008). This is in spite of the current interruption of the external trade. These factors are:
Kuwait has struggled as a country to sustain itself and make a name for itself in the international trade. The drop in the oil business world caused the economy of this country to fall greatly because it is one of its major exports. In a bid to recover its position in the international trade, the country entered into a number of business ventures seeking to diversify its resources. The tourism sector as well as the service industry is among the booming businesses at the time. This is the opportunity that Kuwait sought to seek and utilize. The diversification of the country into these businesses has gone a long way to ensure that they are still a remarkable figure in the international trade world. The tourism sector has provided the funds that Kuwait needed to get itself out of the economic crunch.
By playing their cards right and coming up with the right strategies, the country has been able to salvage its economy and survive. Currently, the oil industry is booming with business, al that was lost in the recession looks like it is going to be recovered in no time. Even though the economy of Kuwait looked as if it had been hugely affected by the changing economic times in the world, the country has established itself as a relevant part of this trade. It is not to be written off at any time as it continues to showcase just how much it is a dependant figure in the international trade. Being a part of this trade has ensured that there are good international relations between the country and the rest of the world. Thus, the citizens of the country are able to benefit from both the good international relations that the country possesses as well as the growing businesses across the entire nation.