Kuwait is one of the biggest players in the global energy market, with its proven oil reserves currently the sixth largest in the world. Although revenues from hydrocarbons account for more than 60% of GDP and 95% of exports, the country’s low production costs and sizeable fiscal reserves mean it is well positioned to cope with lower oil prices in the short term. This is clear from the government’s ongoing commitment to delivering projects outlined in the national development strategy, Kuwait Vision 2035. In the financial services sector, Kuwait continues to perform well, as a series of regulations put in place by the Central Bank of Kuwait in recent years have served to shore up the sector’s recovery from the global economic downturn.

The contrast between Kuwait and the UAE today illustrates the vastly different possible futures facing the smaller states of the Gulf. Dubai's rulers dream of creating a truly global business center, a megalopolis of many millions attracting immigrants in great waves from near and far. Kuwait, meanwhile, has the most spirited and influential parliament in any of the oil-rich Gulf monarchies. In The Wages of Oil, Michael Herb provides a robust framework for thinking about the future of the Gulf monarchies. The Gulf has seen enormous changes in recent years, and more are to come. Herb explains the nature of the changes we are likely to see in the future. He starts by asking why Kuwait is far ahead of all other Gulf monarchies in terms of political liberalization, but behind all of them in its efforts to diversify its economy away from oil. He compares Kuwait with the United Arab Emirates, which lacks Kuwait’s parliament but has moved ambitiously to diversify. This data-rich book reflects the importance of both politics and economic development issues for decision-makers in the Gulf. Herb develops a political economy of the Gulf that ties together a variety of issues usually treated separately: Kuwait's National Assembly, Dubai's real estate boom, the paucity of citizen labor in the private sector, class divisions among citizens, the caste divide between citizens and noncitizens, and the politics of land.

This book asks why in recent years the social and economic upheavals in Kuwait and Qatar have been accompanied by a remarkable political continuity.

This publication provides insight into the varied and rich experience in SOE reform in the region over the past decade, highlighting reform initiatives undertaken at national and country specific levels.

Kuwait accounts for approximately 6.1% of the world’s proven oil reserves, with hydrocarbons revenues comprising more than 65% of the country’s GDP and 95% of total exports in 2013. Cautious budgetary decisions have resulted in large surpluses, creating a solid base for public expenditure programmes such as the National Development Plan, which is set to diversify the economy and boost employment. Although tapering the US Federal Reserve’s quantitative easing programme is likely to affect global liquidity and play a key part in growth prospects for 2014/15, the GCC economy is still forecast to expand by 4.1% for the year, and in Kuwait, where a handful of new PPP plans and deals are slated for 2014, there are promising signs that the year could be a landmark for economic growth and expansion.

Oil production retains its key role in the economy, however plans are under way to encourage diversification away from hydrocarbons towards an economy that is more knowledge based. The political climate has been characterised of late by a number of disputes, often resulting in either the resignation of the government or the dissolution of parliament, which has contributed to the slow progress of some projects.