Impact of Protectionism on Economic Growth: A Case of Kuwait

Authors

  •   Kishore G. Kulkarni Metropolitan State University of Denver, CB 77, P. O. Box 173362, Denver, CO 80217-3362
  •   Geoff Tennent Korbel School of International Studies, University of Denver, 2201 South Gaylord Street,Denver, CO 80209.)

Abstract

International Trade has long debated as a source of economic growth for countries. Economists such as Adam Smith, David Ricardo, Eli Hecksher and Bertil Ohlin, and others have all put forward ideas and models for how countries benefit from international trade, at times building on their predecessorswork.AdamSmith started with his theory of absolute advantage of production, and countries specializing in the products they could produce at a lower cost. These goods would then be exported in exchange for similarly produced goods. David Ricardo Expanded this model looking instead at the theory of comparative advantage. Hecksher and Ohlin continued this trend looking at factor endowments for beneficial trade. Trade can increase the welfare in all countries, but import tariffs then reduce the welfare gained from trade. There are many reasons for protectionism including undesirable specialization, instability in the export market, terms of trade deterioration, aiding infant industries and others. These theories are applied to the situation in Kuwait and it's policies of protectionism. Kuwait currently allows only Kuwaiti individuals and Kuwaiti majority shareholder firms to import into the country, and there is a 5% ad valorem tax on most nonfood items. In early 2006 there was a modernization of the Kuwaiti customs system resulting in an increased efficiency, which then caused an increase in imports. This is verified in the data obtained from the World Bank. The result being an ease in trade leads toincreased tradeandoverallwelfare.

Downloads

Issue

Volume 6, Issue 2, July 2013

Section

Research and Academic Papers

License

It is herein agreed that:

1.I/We will not publish above said contribution anywhere else without the prior written permission of the publisher unless it has been changed substantially.

2.I/ We declare and warrant that the shared contribution is original, excerpts for such excerpts from copyrighted works as may be included with the permission of the copyright holder and author thereof, that it contains no libelous statements, and does not infringe on any copyright, trademark, patent, statutory right, proprietary right of others. The author signs for and accepts responsibility for releasing this material on behalf of any and all co-authors.

3.The author also warrants that he/ she has the right to enter into this agreement, the research paper/ book review/ articlecontains no libelous or unlawful statements, contains no instructions that may cause harm or injury and does not violate the copyright or trademark, or infringes on the right or the privacy or others; and that all statements in the article asserted as facts are either true or are based upon reasonable research.

4.I/ We agree to indemnify the Editors of IMR against all claims and expenses arising from any breach of warranty from me/us in this agreement.