Bahrain Economic Development

In the mid-19th century, Bahrain began to emerge as a major trading center in the Middle East. Bahrain was originally famous for pearl harvesting. Then oil was discovered, and in 1932, the first oil well in the Middle East was drilled in Bahrain, followed by the first refinery in 1935.

Since all oil was owned by the state, the state has used the revenue to finance the state and to contribute to Bahrain economic development. Bahrain has no income or sales taxes.

Since independence, the government of Bahrain has used its revenues to diversify the economic base of the country, primarily in the fields of banking and finance.

This paid off in the late 1970s, when the Lebanese civil war forced out large parts of the banking system there, allowing Bahrain to replace Beirut as the banking and financial hub of the Middle East. Bahrain’s economic prominence was further enhanced by the oil boom of the 1970s.

As part of its diversification, Bahrain has sought to develop its petrochemical and aluminum industries, and since the 1990s has concentrated on knowledge-based industries such as IT and telecom. To popularize the Kingdom, has become the “Home of Motorsport in the Middle East” by hosting the Formula 1 Grand Prix since 2004.

In order to increase its attraction to international business and banking, Bahrain has also become known for its open, tolerant, and liberal attitude toward all ethnic groups and religions.

The government claims that it is seeking greater economic growth for all Bahrainis including Shi’ites. It also claims that Shi’ites benefit as much as other Bahrainis.