The Central Challenge
The economy pillar of the Bahrain Economic Vision 2030 confronts a structural problem that no amount of aspiration can obscure: the kingdom’s private sector was not generating enough high-quality employment for its citizens. At the time of the vision’s publication in 2008, Bahrain’s private sector created approximately 1,100 high-wage jobs per year for Bahraini nationals, compared with 2,700 high-wage positions filled by non-Bahraini workers. The total workforce was projected to double over the following decade.
This imbalance is the economy pillar’s defining problem. If Bahrain’s economy grows but the growth accrues primarily to expatriate labour and foreign capital, the vision fails its own fairness test. Every aspiration within this pillar traces back to a single question: can economic growth be restructured so that Bahraini citizens are its principal beneficiaries?
The measure of success is explicit. The vision targets a doubling of real household disposable income by 2030.
Aspiration 1.1: Stimulate Growth Through Productivity and Skills Enhancement
Bahrain’s productivity challenge is structural, not cyclical. Wages in the public sector have historically exceeded private sector compensation for equivalent roles, creating an incentive structure that pulls Bahraini workers away from the private economy. The vision identifies this distortion as a primary obstacle to sustainable growth.
The productivity aspiration operates on two fronts. First, improve the skills of the Bahraini workforce through education reform, vocational training, and professional development. Tamkeen — the Labour Fund established in 2006 — serves as the primary delivery mechanism for workforce development, providing training subsidies, wage support, and enterprise development programmes.
Second, reform the labour market so that private sector employment becomes attractive to Bahraini nationals. This requires narrowing the wage gap between public and private sectors, reducing the cost differential between hiring Bahraini and expatriate workers, and creating career progression pathways that justify long-term private sector commitment.
The financial services sector serves as the productivity benchmark. Banking, insurance, and capital markets offer the highest wages and the most internationally competitive skill requirements. If Bahrain can raise productivity to financial-sector standards across other industries, the income doubling target becomes feasible.
Aspiration 1.2: Diversify the Economy by Focusing on High-Potential Sectors
Diversification is not a choice for Bahrain. It is a survival imperative. With oil production from domestic fields at approximately 40,000 barrels per day and proven reserves of approximately 125 million barrels, the hydrocarbon base cannot sustain long-term fiscal commitments. The kingdom was the first GCC state to discover oil and will be among the first to exhaust it.
The vision identifies several high-potential sectors for diversification:
Financial Services. Bahrain’s financial sector is the engine of the diversification strategy. The kingdom has served as the Gulf’s financial intermediary since the 1970s, when regional instability elsewhere pushed international banks to establish operations in Manama. The Central Bank of Bahrain regulates more than 370 licensed financial institutions. The sector contributes approximately 17 percent of GDP and employs a higher proportion of Bahraini nationals than most other private sector industries.
The financial services strategy is not to compete with Abu Dhabi’s ADGM or Dubai’s DIFC on scale. Bahrain competes on regulatory maturity, operational cost, and speed of licensing. The CBB’s position as a single, consolidated regulator — covering conventional banking, Islamic finance, insurance, and capital markets — provides a streamlined interface that larger jurisdictions cannot easily replicate.
Tourism. Bahrain hosts the Formula One Gulf Air Grand Prix, held annually at the Bahrain International Circuit since 2004. Tourism strategy focuses on cultural heritage, hospitality infrastructure, and positioning Bahrain as a short-stay destination for visitors from Saudi Arabia via the King Fahd Causeway. Approximately 70 percent of tourist arrivals originate from Saudi Arabia and other GCC states.
Manufacturing. Alba — Aluminium Bahrain — anchors the manufacturing sector. The smelter produces more than 1.6 million tonnes of aluminium annually, making it the largest smelter outside China. The Line 6 expansion, completed in 2021, increased capacity by approximately 540,000 tonnes per year. Alba is the single largest industrial employer in Bahrain and the most significant non-oil export generator.
Business Services and Logistics. Bahrain’s geographic position, between Saudi Arabia and the shipping lanes of the Gulf, supports logistics and business process outsourcing. The vision identifies these sectors as generators of mid-skill, mid-wage employment suitable for Bahraini nationals.
Aspiration 1.3: Transform the Economy by Capturing Emerging Opportunities
The third economic aspiration looks beyond existing sectors to opportunities that were nascent at the time of the vision’s publication. Three categories are defined:
Knowledge Economy. Developing intellectual property, research capacity, and technology-driven business models. This aspiration connects directly to education reform under the society pillar. A knowledge economy requires a workforce with advanced analytical and technical capabilities.
Small and Medium Enterprises. At the time of publication, Bahrain’s economy was concentrated in large enterprises and government entities. The vision identifies SME creation as essential for economic resilience and employment generation. Tamkeen’s enterprise support programmes — including access to finance, business development services, and mentorship — target this gap.
Venture Capital and Innovation Finance. Building a funding ecosystem for early-stage companies. Bahrain FinTech Bay, established in 2019, represents the most visible institutional response to this aspiration. The CBB’s regulatory sandbox, launched in 2017 as the first in the GCC, provides a controlled environment for fintech companies to test products and services.
Structural Constraints
The economy pillar operates under constraints that differentiate Bahrain’s challenge from those of its neighbours. The kingdom cannot deploy sovereign wealth at Abu Dhabi’s scale — Mumtalakat’s approximately $18 billion in assets under management is a fraction of the resources available to ADIA, Mubadala, or ADQ. Government fiscal space is constrained by a credit rating in the B+/B2 range, limiting borrowing capacity.
These constraints mean that the economy pillar’s success depends disproportionately on private sector behaviour. The government can create incentive structures, regulatory environments, and infrastructure. But the actual creation of high-wage employment for Bahraini nationals must come from private enterprises making hiring and investment decisions that align with the vision’s objectives.
The Vanderbilt Terminal tracks this pillar through employment data, sector contribution to GDP, productivity metrics, and the central target of real disposable income growth.