| Kuwait | Feb 19, 2016
As Kuwait celebrates the 25th anniversary of its liberation, a new era of economic development is taking shape as the Gulf state focuses on educating and empowering its largest demographic, the youth.
Reflecting on Kuwait’s development into a modern commercial center, there are several milestone moments that define the country’s identity, both nationally and economically: the discovery of oil in Burgan, which remains one of the richest and second largest oil fields in the world today, the first export of Kuwaiti crude to the global market, the establishment of the Kuwait Investment Authority—the first sovereign wealth fund in the world—the nationalization of Kuwait’s oil industry, the Iraqi invasion of Kuwait, women winning the right to vote and run in parliamentary elections, the establishment of the KWD2 billion National Fund for SME Development, and the declaration of HH the Amir as a global “Humanitarian Leader” by the United Nations in 2014.
As 2016 marks the 25th anniversary of Kuwait’s liberation from Saddam Hussein’s Iraqi forces in 1991, it is worth taking into account how far the country has come since the invasion devastated the national infrastructure and caused a widespread—albeit temporary—exodus. Kuwait is now looking ahead to the next 25 years with ambitious plans for the future, and a strategic approach to economic empowerment that focuses on human capital development as a driver of growth.
With the second largest oil field in the world, Kuwait prioritized investment into its oil economy following the Gulf War, leveraging its top 10 global oil reserves. From producing 1.5 million bopd prior to the Gulf War, Kuwait’s production ground to a halt when Iraqi forces set hundreds of oil wells ablaze in attempts to destroy the primary source of Kuwait’s wealth—oil—and destabilize the national economy. Kuwait has actively maintained its position in the global energy market with major capital investment programs across the hydrocarbon value chain from infrastructure development, to exploration, production, and the enhancement and optimization of production of its reservoirs since the Iraqi invasion. In the efforts to remain a market leader, Kuwait is implementing some of the largest oil and gas projects in the region, with the goal of boosting production to 4 million bpd by 2020.
Another outcome of the Gulf War was an increase in government spending on the country’s true wealth—its people. Strategically, the Kuwaiti government has focused on investing in the education of its citizens especially its youth, key drivers of economic development in the years ahead.
According to the Institute of International Education’s 2014 Open Doors Report, Kuwait ranked 21st of the top 25 origin countries sending international students to study in US universities through government funded scholarships, with 7,288 students from Kuwait studying in the United States during the 2013-14 academic year. Kuwait continues to support the growing number of students looking to study abroad, and this trend shows no sign of slowing down anytime soon.
Domestically, Kuwait University (KU), is undergoing a $3 billion expansion consisting of an 18,000 square meter campus for men and 26,000 square meter campus for women, with technology upgrades to make the campus one of the most advanced in the region. A look at the Kuwait Development Plan, implemented 2010 and running through 2035, has designated $382.51 million for the construction of 100 new public schools. Efforts are also being made to upgrade the National Curriculum Framework, examining ways that public education can be improved by reducing absenteeism, upgrading technology, and raising the bar in public education standards.
Hand in hand with investment in education comes youth development, as more than half of Kuwaitis are under the age of 25. Integrating younger generations into society at large and connecting them to key areas of social development in the private sector, promoting entrepreneurship, and empowering SMEs will ensure that this demographic is tied to the future of the economy. The newly established Ministry of State for Youth Affairs in Kuwait is the government body entrusted with this task.
While Kuwait’s economy remains highly dependent on oil, it is hard to say how the shift in supply and demand will play out over the next decades. What is certain is that the next 25 years represent a major opportunity for growth, advancement, and increasing competitiveness in the regional and global economy for Kuwait. The decades to come are set to be defined in part by the implementation of Kuwait’s Vision 2035, focusing on supporting the growth of SMEs in the country, enabling the private sector to take on a more dominant role in the economy, creating more job opportunities for Kuwaiti nationals in sustainable careers, and the transitioning of government to take on a more supportive role in the country’s economy. With the implementation of improved regulations in its business environment, reducing barriers for investors in the country, and investing in its people, Kuwait can realize its vision of becoming a financial and economic hub in the region.