2014 Index of Economic Freedom

Kuwait

overall score62.3
world rank76
Rule of Law

Property Rights50.0

Freedom From Corruption43.7

Limited Government

Government Spending55.6

Fiscal Freedom97.7

Regulatory Efficiency

Business Freedom57.7

Labor Freedom63.6

Monetary Freedom73.2

Open Markets

Trade Freedom76.7

Investment Freedom55.0

Financial Freedom50.0

Embed This Data

Create a Comparison Chart

See how Kuwait compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 3.8 million
  • GDP (PPP):
    • $151.0 billion
    • 5.1% growth
    • 0.8% 5-year compound annual growth
    • $39,889 per capita
  • Unemployment:
    • 2.1%
  • Inflation (CPI):
    • 2.9%
  • FDI Inflow:
    • $1.9 billion
Embed This Data

Kuwait’s economic freedom score is 62.3, making its economy the 76th freest in the 2014 Index. Its score is 0.8 point lower than last year, with small improvements in monetary freedom and labor freedom outweighed by declining scores for freedom from corruption, fiscal freedom, and the control of government spending. Kuwait is ranked 7th out of 15 countries in the Middle East/North Africa region.

Kuwait’s economic freedom score has dropped by about 4 points over the 19 years it has been graded in the Index. Large score improvements in the categories of government spending and investment freedom have been offset by declines in seven other economic freedoms, including declines of over 20 points in property rights, freedom from corruption, and business freedom. Kuwait has been consistently ranked a “moderately free” economy, achieving its highest score in 1999.

Kuwait has benefited from open-market policies that facilitate global trade and investment flows. The country’s scores for trade freedom and investment freedom have been above the world averages. High oil revenues, however, have delayed privatization and other deep structural reforms that would diversify the economy and help a more vibrant private sector to emerge.

Close

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 undocumented residents 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 new elections in December 2012. 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 7 percent of the world’s oil reserves. Oil accounts for nearly 50 percent of GDP and 95 percent of export revenues.

Rule of LawView Methodology

Property Rights 50.0 Create a Graph using this measurement

Freedom From Corruption 43.7 Create a Graph using this measurement

Corruption remains a dominant political issue, and although lawmakers have pressured the government to address the problem, the public prosecutor formally ended the state’s inquiry into allegations in August 2011 that up to 18 members of parliament received large cash deposits into their personal bank accounts. The legal framework is not well developed, and the rule of law remains weak.

Limited GovernmentView Methodology

Kuwait has no individual income tax. Foreign-owned companies pay a 15 percent corporate tax on net profits, but there are exemptions for foreign investment. Most other revenue is collected from the state’s sovereign wealth fund. The overall tax burden is less than 1 percent of GDP. Government expenditures are 39 percent of gross domestic output. Public debt is relatively low at about 7 percent of GDP.

Regulatory EfficiencyView Methodology

Starting a business takes about a month. Completing licensing requirements, which costs about the level of average annual income, faces bureaucratic hurdles. The labor market remains highly segmented. The government has an extensive system of subsidies and price controls through state-owned utilities and enterprises in an effort to keep a lid on overall inflation.

Open MarketsView Methodology

Kuwait’s average tariff rate is 4.1 percent. There are additional restrictions on imported meat, used vehicles, and other products. Foreign ownership levels in some sectors of the economy are capped. The financial sector continues to evolve. With non-performing loans declining, the banking sector remains well capitalized. The central bank is not completely independent.

Country's Score Over Time

Bar Graph of Kuwait Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Kuwait to other economic country groups

Regional Ranking

rank country overall change
1Bahrain75.1-0.4
2United Arab Emirates71.40.3
3Qatar71.2-0.1
4Jordan69.2-1.2
5Israel68.41.5
6Oman67.4-0.7
7Kuwait62.3-0.8
8Saudi Arabia62.21.6
9Lebanon59.4-0.1
10Morocco58.3-1.3
11Tunisia57.30.3
12Yemen55.5-0.4
13Egypt52.9-1.9
14Algeria50.81.2
15Iran40.3-2.9


View all countries ›

Back to Top