Kuwait’s manufacturing sector: targeting new industries

Abstract

This policy report on Kuwait’s industrial sector is the fifth in a series of reports aimed at identifying strategic options Arab countries have in undertaking structural transformation. Using the product space methodology, this report analyzes existing capabilities of selected economies by identifying products they currently export and determining which path they should follow to produce more sophisticated and strategic products. Kuwait’s position in the product space suggests that the country’s future path for development should focus on new opportunities in the chemical, plastics, foodstuff, and machinery-electrical clusters. While products in the foodstuff cluster are closer in distance in terms of productive knowledge and capabilities of the country, Kuwait should focus on the chemicals & allied industry since they have a higher Product Complexity Index. Nevertheless, all target products are relatively far away when considering their distance from Kuwait’s product space. In such cases, enhancing production possibilities around existing industries will not produce desired leaps, meaning industrial policy should focus on selecting a number of new industries or products at which to target public inputs.