Resource curse reduction through innovation: the case of Kuwait

The strategic issues surrounding the governance of oil resources and its simplication for the growth and development of Kuwait through innovation are considered in this study – Resource Curse Reduction through Innovation. Within the large and growing body of work in this area a negative relationship between resource abundance and poor economic performance has often been empirically established. Many of the third world countries are richly endowed with significant natural resources. A plethora of research findings shows that these countries are scoring lower on human development, they exhibit pervasive corruption, display conflicts and a large percentage of their population live in dire poverty. Moreover, an enormous amount of their gross domestic income is spent on defence spending and manifests an autocratic form of governance. For the most part this evidence appears to support the "resource curse" hypothesis. The question that arises is whether there is any prospect of the "resource curse" being converted into a "blessing". This study examines the role of innovation in this context as Kuwait considers moving away from its dependence on its natural resources which sustain the economy. Since, innovation is considered a result of numerous interactions between key organizations and groups in the economy including institutions of learning, government, firms and other organizations which together form an innovation system, it may be opportune to consider the reductive role of innovation related to the resource curse. There are many unique cultural issues that confront Kuwait, and make it a fundamentally different case from other countries endowed with natural resources. The culture of governance in Gulf countries, and the norms and values within each individual Gulf country, become key determinants of innovation that impact on the various economic, political and social phenomena. By reviewing the extensive literature in both the field of the resource curse and innovation and collecting primary data, this study offers an overview of the challenges of promoting and supporting innovation in Kuwait, and the effectiveness of dissemination of innovative practices throughout the various economic sectors. Numerous studies have considered whether a country's natural resources are a curse or a blessing. Emerging findings appear to suggest that at times, resource-based economic growth models have indeed inhibited growth rates. Development economics also presents numeric data to substantiate the view that the gifts of nature are non-renewable and cannot be replenished. The hypothesis that natural resources of a country might be more of an economic curse than a blessing needs to be tested at different stages of economic growth of a country. The rate at which natural resources are exploited has often been cause for concern. From an economic perspective, Kuwait should inevitably switch from dependence upon natural resources to the development of sectors based on knowledge, skills, capital and technology. A defining characteristic of many resource-rich countries is the discrepancy between the interest of the stewards of the resources and the owners of the resources. At times those in political office (the stewards) appear to work extremely hard to ensure that the rest of the population (the owners) receive little benefit from the resources with which their countries have been abundantly endowed, and so the governance of natural resources merits further research. The study shows that income accruing as a result of the discovery of oil in Kuwait rapidly changed Kuwait's economic priorities, bringing new opportunities and at the same time new challenges. The findings of the research highlight many important issues relating to innovation and the depletion of non-renewable resources indicating to what extent certain sectors of the economy are innovative. One of the unique challenges facing Kuwait is what collective action is necessary to safeguard time honoured traditions that combine economic prosperity with solidarity. Today Kuwait is in need of new commitments on the part of its citizens and decisive actions in political leadership. Instead of maintaining structures and organizations that have shown themselves unable to deal with the challenges that face Kuwait, Kuwait must be ready to support structural changes. This in particular requires a prioritisation of resources towards education, research and development. Kuwait can only become comprehensively innovative if all sectors support the development of innovative products and services. Strategic issues entailing innovation require the involvement of all parties. These include businesses, the public sector, producers and consumers. A wide-ranging partnership for innovation is necessary, particularly when a country‘s resources are in question. To establish an optimal framework and develop potential for innovation, the prospect of an innovation-friendly market must be widely accepted and a national innovation system where the flows of technology and information among people, enterprises, and institutions that are the key to the innovation process at the national level are required. In light of these issues this study recommends the reduction of a resource curse through targeted innovation initiatives. The exploitation of natural assets is a matter of grave concern. Exploration and exploitation are costly and risky exercises in terms of growth and profitability. Kuwait needs to cultivate a culture that fosters creative ideas associated with, among others, safety and security of its natural and human resources, morality, employment and health within the context of an increasingly global environment. A lack of a shared vision, purpose and strategy reduces the vital role that innovation can play. Investment in innovation is therefore critical and Kuwait needs to reinvent itself economically.