From hands off to hands on: the evolution of Bahrain's industrial policy during the 21st century

Purpose - This paper aims to address two fundamental questions: (1) How has Bahrain's industrial policy evolved during the 21st century? and (2) what factors contribute to this evolution? Design/methodology/approach - Utilizing secondary data, this paper identifies key decision-makers responsible for economic policy in Bahrain and delineates the evolution of Bahrain's industrial policy throughout the 21st century. Subsequently, it employs a series of interviews with elite civil servants engaged in the formulation and implementation of Bahrain's economic policies to understand the reasons behind the observed changes. Findings - Since assuming the role of Crown Prince in 1999, Sh. Salman bin Hamad Al Khalifa has been the key economic decision-maker in Bahrain. During the 21st century, Bahrain has shifted away from decisions closely aligned with the Washington Consensus towards those more in line with classical industrial policy. Interviews reveal that the private sector's underperformance in job creation, coupled with fiscal pressures, has driven this departure from the Washington Consensus. Moreover, the early successes of the interventionist Saudi Vision 2030 and Bahrain's own success in technocratically managing the COVID-19 pandemic have accelerated this transition. Practical implications - Insights into the determinants of Bahrain's industrial policy can guide policymakers in refining future strategies. Recognizing the positive role of intellectual developments in academic economics literature becomes crucial for informed decision-making. Originality/value - This paper fills a gap in the existing literature by providing answers to its research questions, particularly considering the significant changes witnessed in Bahrain's industrial policy post-pandemic.