Kuwait economy in the 18th and 19th century was based on trade. At that time Kuwait City and Basra in Iraq were competitors as trade points between India and other parts of the Middle East. Kuwait was the go-between for commerce between the Gulf, Asia, Africa, and Europe. All this was possible due to the natural harbor of Kuwait that first drew the Bani Utub settlers to the place.
By the 19th and 20th centuries, the Kuwait economy has shifted mostly to the pearl trade as pearl diving gained more and more importance. Since the pearl banks here were one of the most abundant in the world, they were richly exploited by the merchants and sailors.
During the early half of the 20the century, the Kuwait economy was supported by 700 boats that employed 15,000 men, all involved in pearl diving. When the pearl diving season (May-September) was over, the Kuwait merchants used the ships for long distance trade. This resulted in the development of a strong ship building industry that was soon famous through the Arabia. Surprisingly, fishing was the smallest of activities that took place among these sailors. This trend continued until the 1990s.
While this produced a very rich merchant class and the Kuwait economy was flourishing, it still offered a very poor standard of life for a majority of the population for those who did not belong to the royal or merchant families. Another blow was struck when the pearl trade began to decline and the Kuwait economy was suddenly in danger of imminent collapse.
Fortunately, in 1938, oil was discovered in Kuwait and ever since the commencing of oil exports in the post World War II era, the Kuwait economy has only changed for the better.
The Kuwait oil reserves are estimated at 96 billion barrels that was supposed to be about 10% of the total reserves in the world. Oil exports count for almost 50% of the GDP, 95% of export revenues, and 80% of government income. Due to the climatic conditions, there is not much scope of agricultural development in Kuwait. Except for fish, Kuwait has to import most of what it eats.
75% of potable water in Kuwait needs to be either distilled or imported. The Kuwait economy is still continuing to look upwards as negotiations continue for the opening of many more oil wells to the north of the country.
The Kuwait economy is controlled by the government who controls the oil industry.