The Kingdom of Bahrain has a rich history but in recent decades has sought to develop into a modern society with investment, strong international ties and a fast-developing economy.
In the 19th Century, Bahrain was no longer dependent upon pearling, and by the middle of the Century, it became the pre-eminent trading centre in the Persian Gulf.
At the same time, Bahrain’s socio-economic development began to diverge from the rest of the Persian Gulf: it transformed itself from a trading centre into a modern state. This process was spurred by the attraction of large numbers of Persian, Huwala, and Indian merchant families who set up businesses on the island, making it the nexus of a vast web of trade routes across the Persian Gulf, Persia and the Indian sub-continent.
Undoubtedly a key watershed in the development of Bahrain came in 1931, when the Bahrain Petroleum Company (Bapco), a subsidiary of the Standard Oil Company of California (Socal), discovered oil and production began the following year. This was to bring rapid modernisation to Bahrain.
Another key moment came when in the early 1930s Bahrain Airport was developed and later that same decade the Bahrain Maritime Airport was established, for flying-boats and seaplanes.
In 1971, Bahrain declared independence. Formerly a state, Bahrain was declared a Kingdom in 2002.
Bahrain has the first post-oil economy in the Persian Gulf. Since the late 20th century, Bahrain has invested in the banking and tourism sectors and the country’s capital, Manama, is home to many large financial structures. Bahrain has a high Human Development Index (ranked 48th in the world) and was recognised by the World Bank as a high income economy.
According to a January 2006 report by the United Nations Economic and Social Commission for Western Asia, Bahrain has the fastest growing economy in the Arab world. Bahrain also has the freest economy in the Middle East and is twelfth freest overall in the world based on the 2011 Index of Economic Freedom published by the Heritage Foundation/Wall Street Journal.
In 2008, Bahrain was named the world’s fastest growing financial center by the City of London’s Global Financial Centres Index. Bahrain’s banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by demand for oil. Petroleum production and processing is Bahrain’s most exported product, accounting for 60 per cent of export receipts, 70 per cent of government revenues, and 11 per cent of GDP. Aluminium production is the second most exported product, followed by finance and construction materials.