Manufactured exports, disaggregated imports and economic growth: the case of Kuwait

Athanasia Kalaitzi and Trevor W. Chamberlain

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This study investigates whether manufactured exports contribute to economic growth and whether imports can augment the role of exports in fostering export diversification. In the case of the latter, the study also examines which categories of imports are most likely to facilitate economic growth in the long run. In particular, the study focuses on the case of Kuwait over the period 1970–2019 and utilizes a Cobb–Douglas production function augmented with manufactured exports and primary and manufactured imports. The long-run relationships between the model variables are explored using two cointegration tests, namely the Johansen test and the dynamic ordinary least squares. The short-run causality is investigated utilizing the multivariate Granger approach in a vector autoregressive model, the parameters of which are assessed for stability using the CUSUM of squares test and recursive residuals plots. To examine the causal relationships in the long run, the Toda and Yamamoto test is applied. The cointegration tests show that the variables are cointegrated, while the Granger causality test shows that manufactured exports and disaggregated imports, together with the inputs of production, cause economic growth in the short run, which, in turn, leads to import growth. In the long run, the expansion of both primary and manufactured imports drives export diversification, whereas manufactured exports do not contribute to economic growth. These findings are very important for Kuwait’s policymakers to consider in their plans to implement Kuwait Vision 2035 as overseas demand for oil wanes.

Keywords: causality; economic growth; export diversification; imports; Kuwait (search for similar items in EconPapers)
JEL-codes: L81 N0 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2023-04-01
New Economics Papers: this item is included in nep-ara, nep-his and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Economic Change and Restructuring, 1, April, 2023, 56(2), pp. 919 - 940. ISSN: 1573-9414

Downloads: (external link)
http://eprints.lse.ac.uk/116877/ Open access version. (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:116877

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().