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Economic Diversification in Bahrain

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  • Ashraf Nakibullah

Abstract

Countries, such as the GCC countries, that predominantly rely for their income on oil resources face the reality that these sources of their income would not last forever. Thus, being a member of the GCC countries, Bahrain has been pursuing the policies of sustainable and diversified economic growth. This paper uses the share of nonoil real GDP to total real GDP as a measure of diversification to access the extent of diversification in Bahrain. The shares of nonoil GDP increased from 64% in the beginning of this of this century to 80% in 2016 with an average annual growth rate of 6.2% for the period 2002-2016. This success story seems to have an inherent problem. A bivariate structural VAR model with nonoil real GDP and oil price shows that oil prices (indirectly oil sector) have positive impact on the movements of the nonoil real GDP. This means nonoil sector has been very much dependent on the oil sector and neutralizing the dependence is required for the post oil era.

Suggested Citation

  • Ashraf Nakibullah, 2018. "Economic Diversification in Bahrain," Applied Economics and Finance, Redfame publishing, vol. 5(5), pages 67-74, September.
    • Handle: RePEc:rfa:aefjnl:v:5:y:2018:i:5:p:67-74
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    References listed on IDEAS

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    1. Mr. Tim Callen & Reda Cherif & Fuad Hasanov & Mr. Amgad Hegazy & Padamja Khandelwal, 2014. "Economic Diversification in the GCC: Past, Present, and Future," IMF Staff Discussion Notes 2014/012, International Monetary Fund.
    2. Hvidt, Martin, 2013. "Economic diversification in GCC countries: past record and future trends," LSE Research Online Documents on Economics 55252, London School of Economics and Political Science, LSE Library.
    3. Tim Callen & Reda Cherif & Fuad Hasanov & Amgad Hegazy & Padamja Khandelwal, 2014. "Economic Diversification in the GCC; Past, Present, and Future," IMF Staff Discussion Notes 14/12, International Monetary Fund.
    4. Mr. Raphael A Espinoza & Mr. Abdelhak S Senhadji, 2011. "How Strong are Fiscal Multipliers in the GCC?," IMF Working Papers 2011/061, International Monetary Fund.
    5. Murshed, Hasan & Nakibullah, Ashraf, 2015. "Price level and inflation in the GCC countries," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 239-252.
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    Cited by:

    1. Ramzi Nekhili & Saad Darwish & Marwan Mohamed Abdeldayem, 2019. "Impact of Education Tourism on Bahrain¡¯s Economic Growth: A Perspective," International Journal of Learning and Development, Macrothink Institute, vol. 9(2), pages 116-133, June.

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    More about this item

    Keywords

    the EDB; diversification; nonoil real GDP; oil price; impulse function;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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