Writing About Contribution S Of Oil Revenue In Bahrain (Essay Sample)

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Table of Contents TOC \o "1-3" \h \z \u Abstract PAGEREF _Toc462773142 \h 3Background PAGEREF _Toc462773143 \h 4Arguments for; PAGEREF _Toc462773144 \h 5i.Advanced education system. PAGEREF _Toc462773145 \h 5ii.Employment growth in financial services PAGEREF _Toc462773146 \h 5iii.Improved infrastructure PAGEREF _Toc462773147 \h 5iv.Entrepreneurial education and training PAGEREF _Toc462773148 \h 6v.Quality healthcare PAGEREF _Toc462773149 \h 7Arguments against; PAGEREF _Toc462773150 \h 71.Unemployment PAGEREF _Toc462773151 \h 72.Inflation PAGEREF _Toc462773152 \h 83.Reduced subsidies. PAGEREF _Toc462773153 \h 8Personal opinion. PAGEREF _Toc462773154 \h 8Policy Recommendations PAGEREF _Toc462773155 \h 9
Abstract
Oil forms a great economic contribution to most oil producing countries around the world. Bahrain is one of those oil producing countries which have greatly benefited from the revenues generated by oil. Research in this paper shows that, Bahrain has benefited in various sections such as; advanced education system, employment in financial services, improved infrastructure and quality care. There are however other negative impacts associated with oil which have been witnessed in Bahrain. These are; unemployment to locals, high chances of inflation and reduced subsidies.
Background
Bahrain is the smallest country on the Persian Gulf with just over one million inhabitants, half of which are emigrants. Bahrain has an open economy for trade, investment and exchange. It is known to have the freest economy in the Middle East and North Africa Region. In fact, it has been ranked as the tenth freest economy worldwide and was even recognized by the World Bank as a high income economy. “Having a free economy means that Bahrain has the freedom to produce trade and subsequently consume goods and services attained without the use of force, scam or theft (Al-Ezzee, 2016)”. Over the years, Bahrain has heavily invested in the banking and tourism sectors. Precisely, the banking and financial services sector has benefited from the regional thrive brought about and driven by the demand for oil. In 2008, Bahrain was named the world's fastest growing financial center by the City of London's Global Financial Centers Index. International financial institutions operate in Bahrain, both offshore and onshore, without barriers, and the financial sector is currently the largest contributor to GDP at 27.6% (Al-Ezzee, 2016).
Oil and Petroleum products constitute the highest percentage of Bahrain’s most exported products. In 2004, crude oil and refined petroleum products accounted for around $5.5 billion of the nation's $7.5 billion in exports. Today, they account for 60% of export revenues, 70% of government revenues, and 11% of Gross Domestic Product (GDP) (El SAHN, AL-A'ALI, & YACOUT, 2013). This goes to show that oil has been a great source of Bahrain’s economic development since its discovery on first of June 1932. Moreover, Bahrain was the first Gulf state to discover oil and built the region's first refinery in 1935 known as the Bahrain Oil Company. It has been 60% owned by the Bahrain National Oil Company and 40% owned by the US company Caltex since 1980.
Apart from contributing to government income, oil revenues have immensely contributed to the well-being of the citizens of Bahrain (Khan, 2013). These contributions have been thoroughly argued for and argued against in this paper.
Arguments for;
* Advanced education system
The government of Bahrain has continued to pay for all schooling costs. In spite of school attendance not being compulsory in Bahrain, primary and secondary school attendance rates have been greatly improved. Literacy rates are high in the region. Advanced education is also available for secondary school graduates at the Bahrain University, Arabian Gulf University and specialized institutes including the College of Health Sciences—operating under the direction of the Ministry of Health which trains physicians, nurses, pharmacists, and paramedics. In addition, the government has identified providing educational services to the Gulf Cooperation Council as a potential economic growth area. It is thus working actively towards establishing Bahrain as a regional center for higher education.
* Employment growth in financial services
Employment in the financial sector has increased by 2.8 percent during 2015. Growth has been particularly rapid in the non-bank financial sector. Financial companies and microfinance institutions have experienced 8.3 percent growth and money changers have risen by 10.8 percent. The proportion of Bahraini women employed in the sector has risen incredibly by 38.2 percent from 37.4 percent in 2014. The Bahraini workforce accounts for 70 percent of the sector’s total workforce (Khan, 2013).
* Improved infrastructure
Oil revenues have been used by the government to build an advanced infrastructure in the transportation and telecommunications sectors. Bahrain's infrastructure is modern, and the government has initiated several major projects. These include constructing a new water distribution network, upgrading the Sitrah power and water station, and expanding other water, power, and waste-treatment facilities (Maeda, 2008). The low fees of Bahrain International Airport, located on Al-Muharraq Island, have turned it into a regional hub. The principal port, Mina' Salman, handles most of the country's general cargo, and petroleum products are loaded at the Sitrah jetty. A national bus company provides public transport throughout the populated areas of the country. Moreover, there are excellent cable and satellite services using the latest digital exchange technology (El SAHN, AL-A'ALI, & YACOUT, 2013). With these highly developed communication and transport facilities, Bahrain has become home to numerous multinational firms with business in the Persian Gulf. These multinational firms are a source of income to some of the citizens in Bahrain hence boosting their standards of living.
* Entrepreneurial education and training
The government has ventured on a number of projects expected to improve the business environment and encourage entrepreneurship. The establishment of the Bahrain Investors’ Centre (BIC) in 2004 was an important step towards facilitating new businesses creation in Bahrain. The BIC serves as a one-stop shop for potential investors. Higher education institutes have also independently recognized the importance of entrepreneurial education (Nakibullah & Islam, 2007). As part of the education reform agenda, entrepreneurship was added to the University of Bahrain’s strategy in 2009. Bahrain Polytechnic has established an Enterprise Development Center on its campus. The center offers entrepreneurial development courses for Polytechnic students. This has enabled citizens to start their own businesses instead of been dependent on formal employment.
* Quality healthcare
Public health services are provided for free to all citizens by the state through the Ministry of health. These healthcare services are heavily subsidized for refugees through a network of Ministry of Health hospitals, maternity units and primary healthcare centers. Non Bahrainis employed in corporations with more than fifty employees are covered under a mandatory health insurance scheme. Despite the expanding population, as of 2004, there was an estimated 221 physicians and 493 nurses per 100,000 people (Peterson, 2010).
Arguments against;
1 Unemployment.
High dependence on oil poses one of Bahrain's biggest long-term economic challenges, unemployment been a major issue. Much of Bahrain's labor force, estimated in 2005 at 380,000, consists of non-Bahrainis (Peterson, 2010). In hopes of encouraging more employment among its citizens, the country has adopted a policy of matching job seekers with potential employers. It is also promoting training programs that will give young adults marketable skills. The country is considering initiating a labor law that will stress the value of vocational training and require that benefits for public Government revenues continue to be largely dependent on the oil industry.
Corruption. As they say, corruption is the root cause of all evils. When royalties and taxes reach government reserves, they are often diverted into the pockets of powerful leaders, rather than been invested in public goods. In some cases, the local comfortable partners that receive ...