Revisiting the Theory of Late Rentierism: The Special Case of Kuwait

The emergence of the new oil states in the 1970s and their promotion to the forefront of world trade and finance resuscitated the concept of rentier economies. Such economies are characterised by a substantial amount of external rent with the wealth accrued from these rents centred around a small fraction of the society, the rest of the society engaged in the distribution and utilisation of this wealth. The basic assumption surrounding this characterization is that it creates a specific mentality: rentier mentality. This has led to the juxtaposition of two parallel economies: a rentier economy dominated by nationals and a productive economy largely filled by expatriates earning their living in a more productive manner. However, the experiences of many rentier states like Saudi Arabia and UAE in the last two decades pose a serious question to rentier dynamics operating in these. These countries have witnessed economic diversification through a recognition that a more entrepreneurial state can ensure longevity when compared to exclusive dependence on extremely volatile oil prices. For these countries, oil income per capita no longer matches the levels achieved in the 1970s and 1980s. This has placed the traditional rentier bargain under strain. The paper, in turn, argues from observations from the country-wide economic data and data on expatriates and nationals that these factors do not operate in Kuwait. The idea of a late rentier does not apply to the country. Rents per capita stay high, no economic diversification comparable to UAE or Qatar has happened in the country and the economy is dependent almost completely on oil. The country's recent strides towards democracy thus remains a question whose answer has to be sought outside the realm of rentier state theory.