Economic Developing throughout History in the Kingdom of Bahrain

The Kingdom of Bahrain, starting out as being famous for its sea activity of building ships, pearl-diving and fishing has since substituted to being most prominently known for its oil resources. However, Bahrain is a country which is involved in more than one economic activity, and is in fact considered to be the fastest growing financial center in the Middle East.

The GCC countries of the Middle East that have largely been reliant for their income on oil resources understand that this source as a sole factor of their economy cannot last on its own. One such country is the Kingdom of Bahrain, which has been for a long time practicing sustainable and diversified policies of economic growth. In 1932, Bahrain established oil production and founded the region’s framework for the petroleum industry. This new and rising resource enabled Bahrain to reform its economy by passing beyond traditional industries such as pearl-diving and fishing, which they were most known for. Since the late 20th century, Bahrain has heavily invested in both banking, specifically Islamic banking, as well as and tourism and hospitality. Today, the kingdom’s national plan, called the “Bahrain Economic Vision 2030”, aims to improve private sector growth and continue government investment in infrastructure, affordable housing, human resources which includes Bahraini talent and entrepreneurship. The plan also calls for the formation of distinct regions for industrial, commercial, tourism and residential projects, and for each region of Bahrain to be autonomous with its own health, education, commercial and leisure services, to ensure the highest quality of living, creating jobs, and aiding the economy to progress further.The kingdom maintains an advanced industrial sector and hosts one of the world’s largest aluminum smelters, Alba, which aids downstream businesses in manufacturing products for international export. Other main industries in Bahrain include their growing food industry, which serves both the local market as well as the global economy.

As the kingdom is based on a free and open economic policy, Bahrain is considered the fastest growing financial center in the Middle East, according to the City of London's Global Financial Centres Index. Bahrain's ascent to the top in the index reflects both the kingdom's continued investment in the finance sector and their ability to attract finance business to the country. Today, according to the Index of Economic Freedom, issued in 2011, Bahrain's economy is the freest in the Middle East and North Africa region, and is recognized as the most business-friendly and cost-competitive center in the Gulf. In fact, Bahrain's GDP currently stands at $15.7 billion, to which the financial sector contributes more than 25 per cent, according to Central Bank of Bahrain. At an early stage, Bahrain pursued diversifying its economy, and determining itself as a leading regional financial center. During the Lebanese civil war, it was Bahrain’s unshakable governing system that encouraged various banks seeking safety and stability to move their capital, and set up base in Bahrain, which helped the Bahraini economy tremendously to this day.

Most significantly, Bahrain has endorsed two major aspects which has led them to the rise of their economy and helped in becoming the fastest growing financial center in the Middle East. The first is that in1939, the Chamber of Commerce and Industry in the Arabian Gulf was established in Bahrain. The chamber has been following the economic development of Bahrain since it had been formed. It continues to have an operative impact in highlighting the roles of private commercial and industrial sectors in the development process. The second, is that Bahrain signed a free trade agreement with the United States in 2005 and became the first country in the Arab Gulf to do so. Under this agreement, tariffs on imports and exports were removed and conditions relating to trade in goods and services between them were made easier to follow. This was to aid trade flows and encourage the flow of foreign investment even further, empowering their financial centers even more, and being able to start with new projects in the kingdom due to increased funding. It also included development in important sectors of industry and services and stimulated the creation of jobs which drove economic growth in the kingdom.

Bahrain has taken many important steps in the right direction with focusing on diversification while also making sure to remain in accordance to the United Nations Sustainable Development Goals, of which they have achieved every goal in the year 2015 and continue to keep up with. The kingdom has varied their economic processes to include different sectors which include banking, infrastructure, the food industry, oil production, aluminum-product manufacture, tourism, and continued sea activity. Bahrain continues to pave the way for future development within the kingdom while being an inspiration to neighboring countries as well.