In the eighteenth and nineteenth centuries, Kuwait's economy was based on trade. The city of Kuwait rivaled Basra in Iraq as an entrepôt for trade between India and parts of the Middle East. Kuwait became a conduit for commerce from the gulf to Asia, Africa, and Europe. It was Kuwait's fine natural harbor that first attracted the Bani Utub settlers, and they made much of this maritime advantage. In the nineteenth and early twentieth centuries, the economy relied primarily on pearl diving, and merchants and sailors harvested the gulf's natural pearl banks, which were among the richest in the world. In the first decades of the twentieth century, Kuwait had about 700 boats, employing approximately 15,000 men. When the pearl-diving season (mid-May to mid-September) ended, Kuwaiti merchants used their ships for long-distance trade. From this trade, a shipbuilding industry developed, and Kuwaiti craft became known throughout coastal Arabia for their quality. Fishing was also a small but important industry. The tradition of seafaring and trade gave Kuwait a thriving merchant class and an outward orientation that remained important into the 1990s.
Although prosperous by regional standards, Kuwait's economy offered only a meager existence to most of the population, especially those outside the ruling families and the merchant families. Even this meager existence began to suffer with the decline of pearling. That industry, the basis of Kuwait's economy, came to a sudden end in the 1920s with the development of the process of making cultured pearls in Japan and then the Great Depression. Fortuitously, the pearl industry declined just as a new source of revenue was emerging. In 1938 oil was discovered in Kuwait. Once oil exports began in the immediate post-World War II years, economic development became nearly continuous.
Data as of January 1993