The economy and economic development in Bahrain demonstrate many of the problems typical with other Arab states in the region. For example, BahrainÆs economy is heavily dependent upon petroleum production and world oil prices, despite the fact that is production has steadily decline since the 1970s and it is the first state in the Arab region to run out of oil. Like other Arab states, BahrainÆs economy suffers from government ownership, lack of diversity, and corruption. So, too, different factions within Bahrain such as the Sunni and Shiite Islamists continue to conflict over the course of progress and development. Such tensions were heightened when Bahrain underwent a transition from a monarchy to a constitutional monarchy. Under the leadership of Prime Minister and King Hamad, BahrainÆs leaders have instituted a number of reforms aimed at diversifying, privatizing, and reinvigorating the economy. In 2002, convening BahrainÆs parliament for the first time since 1975, King Hamad proclaimed, ôItÆs time to get down to work. We need achievements. Our people are interested only in actions,ö (King, 2002, 1). This research will explore the economy of Bahrain and measures that have been instituted by its government to lessen its dependence on petroleum production while stimulating economic growth and development.
Like many other Arab states, BahrainÆs economy and economic development have historically been tied to petroleum production. However, BahrainÆs petroleum reserves are dwindling and the country has made great progress in developing its banking and financial services sector as a means of diversifying. The lack of oil for exporting means the government has recognized the need to launch a costly program of capital investment in order to diversify its economy. With respect to economic performance, GDP in Bahrain was 4.1% in 2001 in comparison to 5.3 percent in 2000 and 4.3 percent in 1999, (Overview, 2002). Bah...