Adjusted-Productivity Growth for Resource Rents: Kuwait Oil Industry

Abstract

Using the data from Kuwait oil industry for the period 2002–2012, this paper has attempted to answer the question how the incorporation of the exhaustible resource rent can affect the multifactor productivity (MFP) growth rate of an exhaustible resource extracting industry. As such it re-examines the notion of incorporating the exhaustible resource (oil) rents in the growth accounting. Such incorporation produces considerable different results compared to the results obtained from the classical growth accounting procedures. This implies that an appropriate growth model for an exhaustible resources-based industry (economy) should take into account the total resource rents to avoid any miscalculation (inaccuracy) in the growth rate of MFP.