Skill intensity in manufacturing exports: do basic, technology-intensive or differentiated exports cause growth in Kuwait?

Kalaitzi, Athanasia (2024) Skill intensity in manufacturing exports: do basic, technology-intensive or differentiated exports cause growth in Kuwait? Economic Change and Restructuring, 57 (5). ISSN 1573-9414

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Abstract

This study examines the causality between basic, technology-intensive, and differentiated manufacturing exports and economic growth in Kuwait using data from 1970 to 2021 and two augmented production function models: one with natural resource exports (Model 1) and the other without on both sides of the model (Model 2). The Johansen cointegration and the autoregressive distributed lag model (ARDL) bound tests are conducted to examine the long-run relationship between the variables. In addition, the Granger causality test in a vector autoregressive framework (VAR) and the Toda–Yamamoto test are employed to explore the directions of the short- and long-run causality between variables, respectively. The empirical results of Model 1 indicate that neither of the decomposed manufacturing exports directly causes economic growth in the short or long run at any conventional significance level, whereas natural resource exports cause economic growth, basic and technology-intensive manufactured exports in the short-run at the 5% level. Model 2 estimations confirm the absence of direct causality between decomposed manufacturing exports and economic growth, whereas a long-run causality runs from output net of natural resource exports to basic manufactured exports at the 10% level. Both model estimations indicate that all the variables jointly cause economic growth and basic manufactured exports in the short and long run, directly or indirectly through imports, confirming the existence of a circular causation. These findings can serve as the basis for designing specific export–import policies to foster diversification and a sustainable economic growth in line with Kuwait’s Vision 2035.

Item Type:	Article
Official URL:	https://link.springer.com/journal/10644
Additional Information:	© 2024 The Author
Divisions:	Middle East Centre
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East
Date Deposited:	12 Aug 2024 11:54
Last Modified:	18 Nov 2024 20:24
URI:	http://eprints.lse.ac.uk/id/eprint/124521

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