Bahrain's Development: A Comprehensive Overview

Bahrain is a small island nation in the Persian Gulf with a population of about 400,000. The country gained independence from Britain in 1971 and has been governed by the Khalifa family since the 18th century. Bahrain's economy is heavily dependent on oil and gas, with petroleum accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Despite its wealth, Bahrain is still considered a developing country by some due to its continued reliance on oil, lack of social equality, and cultural and professional shortcomings. However, others argue that Bahrain is a first-world country with a high Human Development Index (HDI) and better safety, access to healthcare, and housing than many developed nations. The country has a strong financial sector and is the main banking hub for the Persian Gulf, attracting major international financial institutions.

Bahrain's economy is heavily dependent on oil and gas

Bahrain's oil and gas sector has a long history, dating back to the discovery of oil in the 1930s. The country has two main oil fields: the onshore Bahrain field and the offshore Abu Safah field, which it shares with Saudi Arabia. In addition to these fields, Bahrain also has the Bahrain Petroleum Company (BAPCO) refinery, which was built in 1935 and was the first in the Persian Gulf. BAPCO is currently undergoing a $7 billion upgrade to boost its processing capacity and improve energy efficiency and emissions.

The revenue generated from the oil and gas sector has been crucial in developing Bahrain's infrastructure and improving its standard of living. The government has invested in areas such as health, education, housing, transportation, and water supply. Additionally, Bahrain has used its oil wealth to position itself as a regional financial and business center, with a successful banking and financial services sector. Manama, the country's capital, is home to many large financial institutions.

However, Bahrain's oil reserves are limited compared to its Persian Gulf neighbours, and the country has been working to diversify its economy beyond oil and gas. Bahrain has expanded into sectors such as banking, heavy industries, retail, and tourism. The country has also been attracting investment from other Persian Gulf states and international companies, further contributing to its economic growth and development.

While Bahrain has made strides in economic diversification, the oil and gas sector remains a critical component of its economy. The country's recent discoveries of new oil and gas reservoirs, along with its efforts to upgrade its refinery and explore Carbon Capture and Storage technology, indicate that the oil and gas industry will continue to play a prominent role in Bahrain's economy in the years to come.

Bahrain has the fourth-freest economy in the Middle East and North Africa region

Bahrain is an island country in West Asia, situated in the Persian Gulf. It is recognised by the World Bank as a high-income economy and has the fourth-freest economy in the Middle East and North Africa region. Bahrain's economy is heavily dependent on oil and gas, with petroleum being the country's most exported product, accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. However, Bahrain has also heavily invested in the banking and tourism sectors since the late 20th century, and its finance industry is very successful. Bahrain's capital, Manama, is home to many large financial institutions.

Bahrain's banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by the demand for oil. Bahrain is the main banking hub for the Persian Gulf and a centre for Islamic finance, which has been attracted by the country's strong regulatory framework for the industry. Bahrain's dinar is the second-highest-valued currency unit in the world.

Bahrain has a high Human Development Index (HDI), ranking 48th in the world. The country has a 100% primary school attendance rate, a relatively high secondary school attendance rate, and a 74% literacy rate. Bahrain has also developed one of the first post-oil economies in the Persian Gulf, resulting from decades of investment in the banking and tourism sectors.

Bahrain has expanded its industrial capacity to include aluminium production and has signed a Free Trade Agreement with the United States to expand its export base. The country has also positioned itself as a strong player in Islamic banking, aiming to expand its role in the international service industry beyond resource exports. Bahrain's other industries include aluminium smelting and related factories, shipbuilding and repair, and ammonia, methanol, and urea production for export.

Overall, Bahrain has the fourth-freest economy in the Middle East and North Africa region, with a successful finance industry, a high HDI, and a diverse range of industries.

Bahrain's finance industry is very successful

Bahrain is a global leader in Islamic finance and banking, offering FinTech companies and banking institutions deep levels of industry expertise. Bahrain Islamic Bank and other financial services companies help lead the way in Islamic finance in the Gulf Cooperation Council (GCC) and beyond. Bahrain is first in the GCC for Islamic Banking and Corporate Governance (second globally) based on the Refinitiv Islamic Finance Development report 2021.

Bahrain is also home to the Middle East and North Africa (MENA) region's leading FinTech hub, Bahrain FinTech Bay, which provides a dedicated co-working space, innovation labs, advisory services, and more. The transformation of Bahrain's FinTech ecosystem has been driven by unmatched regulatory reform, paving the way for emerging industries including robo-advice and crypto-asset platforms. FinTech establishments can expand their industry offerings thanks to the country's flexible markets and strong technology infrastructure.

Bahrain's financial services sector is the largest non-oil contributor to Bahrain's real GDP. The sector is also the country's largest employer, with around 13,700 individuals working in the industry. In 2021, 69% of workers in the sector were Bahraini nationals, while 31% were foreigners, according to the Central Bank of Bahrain.

Bahrain's development as a major financial centre has been the most widely recognised aspect of its diversification effort. International financial institutions operate in Bahrain, both offshore and onshore, without impediments. Bahrain's central bank issued 15 new licenses in 2001. More than 100 offshore banking units and representative offices are located in Bahrain, as well as 65 American firms. Bahrain's international airport is one of the busiest in the Persian Gulf, serving 22 carriers. A modern, busy port offers direct and frequent cargo shipping connections to the US, Europe, and the Far East.

Bahrain's literacy rate is high but social equality is affected by nepotism

Bahrain's literacy rate has been consistently increasing over the years, with the 2022 literacy rate for people aged 15 and above reaching 97.87%. This is a 5.57% increase from 2011, which had a literacy rate of 92.30%.

However, despite these high literacy rates, Bahrain has been criticised for its treatment of the native Shia Muslim population, with reports of torture, forced disappearances, and the destruction of Shia mosques. The country has also been criticised for its treatment of stateless people, who are denied basic rights such as the right to hold legal residency, travel abroad, or own land.

In addition, nepotism is prevalent in Bahrain, with reports of appointments being made based on family connections rather than merit. For example, in 2017, Sheikh Khalifa bin Ali Al Khalifa, the son of the deputy prime minister and grandson of the prime minister, was appointed as the governor of Bahrain's Southern Governorate. This appointment was met with a flood of congratulatory messages, with many celebrating the family connections of Sheikh Khalifa rather than his own achievements.

The prevalence of nepotism in Bahrain undermines social equality and contributes to a culture of favouritism and privilege for those with family connections to the ruling elite.

Bahrain's land is unsuited to agriculture

Bahrain is a small island nation in the Persian Gulf, off the coast of Saudi Arabia. It has a population of about 400,000 people, with 66% of the population indigenous to the Arabian Peninsula and Persia. The country has a very high Human Development Index (HDI) and is considered a well-developed place due to its abundant oil wealth. However, Bahrain's land is not well-suited to agriculture.

Historically, agriculture was an important sector of Bahrain's economy, with date palm cultivation dominating and producing enough dates for domestic consumption and export. Over time, however, the country's cultivated land has decreased due to various factors, including low rainfall, poor soil, and increasing salinity of aquifers used for irrigation. These challenges have led to a decline in date cultivation and a shift towards other agricultural activities, including vegetable gardens, nurseries, poultry production, and dairy farms.

Bahrain's land is characterised by low rainfall and poor soil quality, making it challenging for agricultural practices. The country has limited water resources, and the increasing salinity of the aquifers that once served as irrigation sources has further hindered traditional agricultural methods. As a result, Bahrain has had to rely on alternative crop production methods and adopt more sustainable approaches, such as horticulture, to maximise growth while conserving limited resources.

The small size of most plots and the unequal distribution of land ownership have also discouraged private investment in agriculture. Additionally, the number of skilled farmworkers has declined as more people pursue high-paying jobs in non-agricultural sectors. Despite government efforts to expand domestic crop production through various programmes, the limited cultivable area constrains the country's potential productive capacity. As a result, Bahrain continues to rely on agricultural imports to meet its food needs.

In summary, Bahrain's land is unsuited to agriculture due to a combination of factors, including water scarcity, poor soil quality, increasing soil salinity, limited land availability, and a decreasing number of skilled farmworkers. While the country has made efforts to adopt more sustainable agricultural practices and maximise its limited resources, it still relies heavily on agricultural imports to meet its food requirements.

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