Kuwait's traditional exports were pearls and hides, but since 1946 it has become a major petroleum producer and oil now dominates the economy. The country is mostly desert, with some fertile areas near the Persian Gulf coast; there is virtually no agricultural industry aside from fishing.
Kuwait has the third largest oil reserves in the world after Saudi Arabia and Iraq. The main concession for oil exploitation was held by a joint British-American firm until 1974, when Kuwait took control of most of the operations; it had previously retained a large part of the oil profits. Much of the profits have been devoted to the modernization of living conditions and education in the country. The petroleum industry, which accounts for about 95% of Kuwait's export revenues, was severely damaged in the Persian Gulf War. However, by the end of 1992, the country had repaired nearly all the damage to its war-ravaged oil fields and its oil output was at about prewar levels. Huge amounts of natural gas complement Kuwait's oil and petrochemical production.
To provide against the possible future exhaustion of the oil reserves, in the 1960s the government launched a program of industrial diversification and overseas investment. Present industries include shipbuilding and repair, water desalinization, food processing, construction, and fertilizer production. Food, construction materials, vehicles, and clothing are the principal imports. Kuwait's major trading partners are Japan, the United States, South Korea, Taiwan, and Germany.