The State of Kuwait is a small rich oil-based economy characterized by
dominance of the large public sector in major economic activities. Such
imbalanced structure has limited the role of the private sector in economic
activities and has adversely affected economic growth. Based on
the review of international experience in private sector development, this
paper aimed to substantiate the impact of both private and public sectors
growth on economic performance. Analysis of Kuwait's public expenditures
verified the public sector
dependency on oil revenues and inefficient utilization of resources. The theoretical review revealed
a positive direct relationship between high GDP growth rate and the increased
role of the private sector in the economy. Moreover, the review of recent
transitional economies experiences in constructive economic transformation can
be considered as an evidence of a rapid effective private sector growth. Finally,
the analysis also demonstrated that Kuwait's public sector
expenditures depict a rent seeking behaviour that has negatively impacted the
society welfare.
References
[1]
Central Statistical Bureau (CSB) (2011) Annual Statistical Abstract, State of Kuwait.
[2]
Hall, R.E. and Papell, D.H. (2005) Macroeconomics: Economic Growth, Fluctuations and Policy. 6th Edition, W. W. Norton & Company, New York.
[3]
World Bank (2002) Private Sector Development Strategy—Direction for the World Bank. World Bank, Washington DC.
[4]
Dabbah, M. (2010) Competition Law and Policy in Developing Countries: A Critical Assessment of the Challenges to Establishing an Effective Competition Law Regime. World Competition: Law and Economics Review, No. 457.
[5]
Bennett, J., Estrin, S. and Urga, G. (2007) Privatization Methods and Economic Growth in Transition Economies. Economics of Transition, 15, 661-683. http://dx.doi.org/10.1111/j.1468-0351.2007.00300.x
[6]
Mavrov, H. (2007) The Size of Government Expenditure and the Rate of Economic Growth in Bulgaria. Economic Alternatives, 1, 52-63.
[7]
Ram, R. (1989) Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data. The American Economic Review, 79, 218-284.
[8]
Barro, R. (1991) Economic Growth in a Cross-Section of Countries. Quarterly Journal of Economics, 106, 407-443. http://dx.doi.org/10.2307/2937943
[9]
Bairam, E. (1990) Government Size and Economic Growth: The African Experience 1960-85. Applied Economics, 22, 1427-1435. http://dx.doi.org/10.1080/00036849000000113
[10]
Grossman, P.J. (1990) Government and Growth: Cross-Sectional Evidence. Public Choice, 65, 217-227.http://dx.doi.org/10.1007/BF00204946
[11]
Husnain, I. (2011) Is the Size of Government Optimal in Pakistan? Journal of Economics and Economic Education Research, 12, No. 2.
[12]
Scully, G. (1994) What Is the Optimal Size of Government in the US? National Centre for Policy Analysis. Policy Report, No. 188. http://www.ncpa.org/studies/s159/s159.html
[13]
Barro, R.J. (1990) Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98, 103-126. http://dx.doi.org/10.1086/261726
[14]
Falke, M. (2002) Community Interests and Insolvency Objective in Transition Economies? Europa-Universitaet Viadrina, Institut fur Transformationsstudien—FIT—Frankfurt an der Oder (Germany). http://www.opengrey.eu/partner/fiz
[15]
IMF (2000) Transition Economies: An IMF Perspective on Progress and Prospects. International Monetary Fund. http://www.imf.org/external/np/exr/ib/2000/110300.htm
[16]
The European Bank for Reconstruction and Development (EBRD) (1991-2010) Transition Report. The European Bank for Reconstruction and Development, London.
[17]
Brixiova, Z. and Kiyotaki, N. (1997) Private Sector Development in Transition Economies. Carnegie-Rochester Conference Series on Public Policies No. 46, 241-279.
[18]
Financial Division (2008) Public Budget Report. http://www.dof.gov.ae
[19]
Kanamori, T. and Zhao, Z. (2004) Private Sector Development in the People’s Republic of China. Asian Development Bank Institute, Tokyo.
[20]
Callick, C. (2007) The China Model. www.american.com/archive/2007/november-december-magazine-contents/the-china-model
[21]
Zheng, H. and Yang, Y. (2009) Chinese Private Sector Development in the Past 30 Years: Retrospect and Prospect. International House University of Nottingham, China Policy Institute.
[22]
Chandrashekahr, C.P. (2005) How Large Is China’s Private Sector. India’s National Magazine, 22, 8-21.
[23]
Scully, G. (1989) The Size of the State, Economic Growth and the Efficient Utilization of National Resources. Public Choice, 63, 149-164. http://dx.doi.org/10.1007/BF00153397
[24]
Tullock, G. (2005) The Rent-Seeking Society: The Selected Works of Gordon Tullock, Vol. 5. Liberty Fund, Indianapolis.
