Bahrain is an island country in the Persian Gulf. The sovereign statecomprises a small archipelago centered around Bahrain Island, situated between the Qatar peninsula and the north eastern coast of Saudi Arabia, to which it is connected by the 25-kilometre (16 mi) King Fahd Causeway. Bahrain’s population is 1,234,571 (c. 2010), including 666,172 non-nationals. It is 765.3 square kilometres (295.5 sq mi) in size, making it the third-smallest nation in Asia after the Maldives and Singapore.
Bahrain is the site of the ancient Dilmun civilisation. It has been famed since antiquity for its pearl fisheries, which were considered the best in the world into the 19th century. Bahrain was one of the earliest areas to convert to Islam, in 628 CE. Following a period of Arab rule, Bahrain was occupied by the Portuguese in 1521, who in turn were expelled in 1602 by Shah Abbas I of the Safavid dynasty under the Persian Empire. In 1783, the Bani Utbah clan captured Bahrain from Nasr Al-Madhkur and it has since been ruled by the Al Khalifa royal family, with Ahmed al Fateh as Bahrain’s first hakim.
In the late 1800s, following successive treaties with the British, Bahrain became a protectorate of the United Kingdom. In 1971, Bahrain declared independence. Formerly an emirate, the Arab constitutional monarchy of Bahrain was declared a kingdom in 2002. In 2011, the country experienced protests inspired by the regional Arab Spring. Bahrain’s ruling al-Khalifa royal family has been accused and criticized for human rights abuses, including imprisonment, torture and execution of dissidents, political opposition figures and its Shia Muslim population.
Bahrain had the first post-oil economy in the Persian Gulf. Since the late 20th century, Bahrain has invested in the banking and tourism sectors. Many large financial institutions have a presence in Manama, the country’s capital. It has a high Human Development Index and is recognised by the World Bank as a high-income economy. Bahrain is a member of the United Nations, Non-Aligned Movement, Arab League, Organisation of Islamic Cooperation and the Gulf Cooperation Council.
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% of export receipts, 70% of government revenues, and 11% of GDP. Aluminium production is the second-most exported product, followed by finance and construction materials.
Economic conditions have fluctuated with the changing price of oil since 1985, for example during and following the Persian Gulf crisis of 1990–91. With its highly developed communication and transport facilities, Bahrain is home to a number of multinational firms and construction proceeds on several major industrial projects. A large share of exports consist of petroleum products made from imported crude oil, which accounted for 51% of the country’s imports in 2007. Bahrain depends heavily on food imports to feed its growing population; it relies heavily on meat imports from Australia and also imports 75% of its total fruit consumption needs. Since only 2.9% of the country’s land is arable, agriculture contributes to 0.5% of Bahrain’s GDP. In 2004, Bahrain signed the Bahrain–US Free Trade Agreement, which will reduce certain trade barriers between the two nations. In 2011, due to the combination of the global financial crisis and the recent unrest, the gdp growth rate decreased to 1.3%, which was the lowest growth rate since 1994.
Unemployment, especially among the young, and the depletion of both oil and underground water resources are major long-term economic problems. In 2008, the jobless figure was at 4%, with women over represented at 85% of the total. In 2007 Bahrain became the first Arab country to institute unemployment benefits as part of a series of labour reforms instigated under Minister of Labour, Dr. Majeed Al Alawi.