The prospect of economic development in Bahrain through the services sector

Abstract

This study investigates the problems associated with the future economic and social development of a small economy - Bahrain. Bahrain has adopted an industrialisation strategy to diversify the economy since the sixties. The outcomes of that strategy were encouraging at first, but were not sustainable in the long- run. Since the early eighties, changes in the external and internal situations have triggered a debate, which called for a review of the strategy. This study has two-fold objectives. The first is to contribute to the early conclusion of the debate on the to be taken for the future economic development of Bahrain. The second is to discuss the possibilities of adopting a services sector led strategy for the economic development of the country. The study emphasises two important factors which debate on the strategy has not given special attention to. The first is that Balirain has unique features because of its' smallness. The second is the important of utilising and analysing the sectoral and subsectoral data to become to a more objective conclusion about the role of industrial or/and services sector. The study capitalised on the small economy concept. The small island economies have especial natural and characteristics as compared to large economies. The small island economies differ in terms of population size, land, natural and financial resources, small domestic market and etc. This has made these countries to be more depended on the regional and international market for both exports and imports. These have profound implications to the countries in pursuing their economic and social development objectives. Politicians as well as economists in formulating policies for future economic development have overlooked this uniqueness. Notions of unbalanced growth and the theory of the leading sector are relevant to the development of a small island economy. But concepts such as self-reliance and the theory of dependency are not. Economic integration among countries, especially among developing countries has accelerated economic development. For a small economy, economic integration is imperative, whatever form it may take.