Rising import supply base concentration in a resource-dependent economy: Evidence from Kuwait and the role of China

Abstract

Background: Resource-dependent economies with limited domestic manufacturing capacity rely almost entirely on imports for consumer goods, food and industrial inputs. Despite the growing literature on supply chain risk and supply base management, the import source concentration patterns of such economies have received little empirical attention.
Objectives: This study characterised the evolution of import source concentration in Kuwait, a trade-dependent, resource-based economy, over 25 years; decomposed the drivers of rising concentration; and tested whether oil revenue dynamics influence sourcing patterns.
Method: Monthly bilateral import data for Kuwait from 217 partner economies over 2000–2024 (50,709 observations) were obtained from the IMF Direction of Trade Statistics. Concentration was measured using the Herfindahl-Hirschman Index (HHI), Concentration Ratios (CR4, CR10) and Theil Entropy Index. Trend analysis with Newey–West standard errors, Chow structural break tests and Granger causality analysis were employed.
Results: Import concentration rose 47% over 25 years (HHI: 468–687), accelerating from 4.0 points per year in 2000–2007 to 20.2 in 2020–2024. China’s share rose from 3.7% to 18.0%, displacing European suppliers. Oil prices Granger-caused China’s share (p < 0.001), with no reverse causality. Findings were robust to alternative measures and sub-period analysis.
Conclusion: Kuwait’s import supply base is concentrating at an accelerating rate, creating measurable supply chain vulnerability that warrants policy intervention.
Contribution: This study provides a high-frequency empirical characterisation of import supply base concentration in a Gulf Cooperation Council economy, bridging the supply chain risk literature and the trade dependency challenges of resource-based economies.