Economy of Bahrain – Essay Example
The Kingdom of Bahrain is a state that unites a group of islands in the Persian Gulf between Saudi Arabia and Iran. The capital Manama is situated on the largest island (also called Bahrain). The state comprises of 35 islands, which consist mainly of limestone and sand that cover poor and infertile soils. A Highway links Bahrain with Saudi Arabia.
The economy of Bahrain leaped straight from the Bronze Age (from pearl fishing) to the industrial and the postindustrial era in the XX century. This rapid change of the way of life happened over 75 years (the time of one generation), and no other country in the world has experienced something similar. The development of Bahrain’s economy can be divided in 4 stages.
The first stage – pre-industrial, or pearl stage phase began in prehistoric times and lasted until the mid-1930s, when the production of pearls began to decline due to competition from Japan. The industrial oil phase came in 1934, when Bahrain was the first in the region to begin oil production and was able to survive the downturn in the production of pearls. In the second half of XX century, they began to produce gas. Oil and gas have become the backbone of the country and altogether changed its image. This phase lasted until the 70s, when oil production peaked in 1977 (4 million tons), and then went into decline.
The industrial post-oil phase began in 1965 when the threat of oil and gas depletion in Bahrain has embarked on accelerated development of manufacturing industries. As a result, these industries came to a leading position in the country and the volume of production exceeded the oil and gas production by 2.5 times.
Post-industrial phase of development in Bahrain started in the 80s after the country gained its independence, and can be characterized by the advanced growth of the service sector (especially financial and business services), which became the foundation of the economy.
Today, Bahrain has a lot to be proud of. Over the past 10 years, with the pace of economic growth (4.5% per year), it was ahead of all other Middle East countries. In 2005, its GDP grew by 7%, in 2006 – by 7.6%, and reached 17.7 billion dollars.