KUWAIT
Economic Freedom Score
25
World Rank:
74
Regional Rank:
7
Least
free 0
uwait’s economic freedom score is 62.5, making its econoK
my the 74th freest in the 2015 Index. Its score is 0.2 point
better than last year, reflecting improvements in the manage-
50
75
Most
100 free
62.5
Freedom Trend
66
ment of government spending, business freedom, monetary
freedom, and labor freedom that offset declines in property
rights, freedom from corruption, and trade freedom. Kuwait is
ranked 7th out of 15 countries in the Middle East/North Africa region, and its overall score is slightly above the regional
and world averages.
Over the past five years, economic freedom in Kuwait has
declined by 2.4 points. Score declines have occurred in six
of the 10 economic freedoms, led by deteriorations in the
control of government spending, business freedom, and
trade freedom.
High oil revenues have excused policymakers from making
tough choices to liberalize the economy, including privatizing some state-owned enterprises. Structural reforms remain
critically necessary to spur dynamic growth and ensure longterm economic development. While Kuwait continues to
benefit from an open trading regime that attracts investment
flows, rising protectionism must be controlled in order to
maintain international trade linkages.
BACKGROUND: Kuwait, one of the richest Arab nations, is a
constitutional monarchy ruled by the al-Sabah dynasty. During the Arab Spring of 2011, young activists called for political
reforms, and residents unlawfully in the country demanded
citizenship and jobs. After Islamists scored major gains in parliamentary elections in February 2012, Amir Sabah al-Ahmad
al-Jabr al-Sabah annulled the results and changed the election laws. This sparked protests and triggered a boycott of the
new election in December. The results of that election were
annulled by the Constitutional Court, and in new balloting
held in July 2013, pro-government Sunni candidates achieved
a significant majority. Kuwait controls roughly 6 percent of
the world’s oil reserves. The oil and gas sector accounts for
nearly 50 percent of GDP and 95 percent of export revenues.
How Do We Measure Economic Freedom?
See page 475 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
65
64
63
62
61
2011
2012
2013
2014
2015
Country Comparisons
Country
62.5
World
Average
60.4
Regional
Average
61.6
Free
Economies
84.6
0
20
40
60
80
100
Quick Facts
Population: 3.9 million
GDP (PPP): $154.5 billion
0.8% growth in 2013
5-year compound annual growth 0.6%
$39,706 per capita
Unemployment: 3.1%
Inflation (CPI): 2.7%
FDI Inflow: $2.3 billion
Public Debt: 5.3% of GDP
2013 data unless otherwise noted.
Data compiled as of September 2014.
275
KUWAIT (continued)
THE TEN ECONOMIC FREEDOMS
Score
RULE OF
LAW
Country
World Average
Property Rights 45.0
Freedom from Corruption 43.0
0
20
40
60
80
Rank
1–Year
Change
66th
69th
–5.0
–0.7
100
Five opposition members of parliament resigned in May 2014 after they were denied a request
to question the prime minister about corruption. There are occasional accusations of attempted bribery in the government’s lengthy procurement process. The legal framework is not well
developed, and the rule of law remains weak. Foreigners face difficulties enforcing contract
provisions in the local courts.
Fiscal Freedom 97.7
GOVERNMENT
Government Spending 61.1
SIZE
7th
109th
0
20
40
60
80
0
+5.5
100
Kuwait has no individual income tax. Foreign-owned companies are subject to a 15 percent tax.
Taxes make up a small portion of government revenue, with most financing coming from oil
and gas windfalls. Overall tax revenue is less than 1 percent of domestic output. Public expenditures equal 36 percent of domestic production, and government debt amounts to 5 percent
of gross domestic product.
REGULATORY
EFFICIENCY
Business Freedom 58.6
Labor Freedom 64.2
Monetary Freedom 74.0
118th
79th
121st
0
20
40
60
80
+0.9
+0.6
+0.8
100
Progress in improving Kuwait’s regulatory framework has been uneven. Incorporating a business still takes more than 30 days, and bureaucratic hurdles continue to add to the cost of
business. Overall labor regulations lack flexibility. The government has an extensive system
of subsidies and price controls through state-owned utilities and enterprises, although diesel
fuel subsidies were cut in 2014.
OPEN
MARKETS
Trade Freedom 76.2
Investment Freedom 55.0
Financial Freedom 50.0
94th
96th
70th
0
20
40
60
80
–0.5
0
0
100
Kuwait’s average tariff rate is 4.4 percent. Government procurement may favor domestic firms,
and imports of books and media deemed detrimental to public morals are not allowed. The relatively well-developed financial system offers a wide range of services. Restrictions on foreign
banks include a ban on competing in the retail sector. Foreign banks are limited to providing
investment banking services.
Long-Term Score Change (since 1996)
RULE OF LAW
Property Rights
Freedom from
Corruption
276
–45.0
–27.0
GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending
–2.2
+50.2
REGULATORY
EFFICIENCY
OPEN MARKETS
Business Freedom –26.4
Labor Freedom
–16.0
Monetary Freedom –7.7
Trade Freedom
–0.8
Investment Freedom +25.0
Financial Freedom
0
2015 Index of Economic Freedom