Economic Overview of Bahrain

The economy and economic development in Bahrain demonstrate many of the problems typical with other Arab states in the region. For example, Bahrain's 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, Bahrain's 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, Bahrain's leaders have instituted a number of reforms aimed at diversifying, privatizing, and reinvigorating the economy. In 2002, convening Bahrain's parliament for the first time since 1975, King Hamad proclaimed, "It's time to get down to work. We need achievements. Our people are interested only in actions," (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, Bahrain's economy and economic development have historically been tied to petroleum pr

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olding tax No restriction on repatriation of capital, profits, royalties or wages Free movement of foreign exchange 100% foreign ownership of a company is permitted Consistent government policy of encouraging overseas investment Cheap energy and fuel costs Modern health care, hospitals, and medical facilities Highly congenial business and cultural environment Virtually non-existent crime rate (Island, 1997, 27) Bahrain enjoys other advantages that help stimulate the economy. It has a solid infrastructure, duty-free port legislation, a well-developed legal system, and stable government that supports private enterprise, a well-educated and affordable workforce, the best telecommunication and financial services facilities in the Arab world, and an international and world class airline. Because of its advantageous location, one analyst refers to Bahrain as "the Gateway to the Arabian Gulf" (Island, 1997, 26). To promote trade and commerce, Bahrain is a member of the World Trade Organization (WTO), and the Multilateral Investment Guarantee agency, an arm of the World Bank that oversees arbitration on the international level. The U.S. Heritage Foundation's 1997 Economic Freedom index ranked Bahrain third in the world out of 140 coun

Category: Economics - E