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BAHRAIN HUMAN DEVELOPMENT REPORT 2018 Pathways to Sustainable Economic Growth in Bahrain

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BAHRAIN HUMAN DEVELOPMENT REPORT 2018 Pathways to Sustainable Economic Growth in Bahrain BAHRAIN HUMAN DEVELOPMENT REPORT 2018 Pathways to Sustainable Economic Growth in Bahrain BAHRAIN HUMAN DEVELOPMENT REPORT 2018 Pathways to Sustainable Economic Growth in Bahrain BAHRAIN HUMAN DEVELOPMENT REPORT 2018 PATHWAYS TO SUSTAINABLE ECONOMIC GROWTH IN BAHRAIN MANAMA, KINGDOM OF BAHRAIN — Photo Credits: National Geographic TABLE OF CONTENTS Disclaimer 10 Report Contributors 11 Acknowledgements 14 Authorship Team 15 List of Acronyms 16 Foreword 20 Preface 22 Production Process 24 List of Figures, Tables, and Boxes 26 Executive Summary 30 Introduction 32 An Overview of the Bahrain Economy 34 Human Development in Bahrain 36 Bahrain’s Economic Vision and the SDGs 42 • The Economic Vision 2030 42 • The Government Action Plan and the SDGs 42 • The Economic Vision, GAP, and SDGs in 2018 43 Sustainable Economic Growth: A Succinct Primer 44 How to Read this Report 48 1. Economic Diversification, Competitiveness and the role of SMEs: Challenges and Opportunities 50 1.1. Economic Diversification and Its Challenges, Including the Role of SMEs 52 • 1.1.1. How Diversified is the Bahraini Economy? 52 • 1.1.2. Recommendations for Bahrain 71 1.2. The Tourism Industry for Bahrain 83 • 1.2.1. Tourism as a Way of Diversifying the Economy 83 • 1.2.2. Bahrain’s Tourism Sector 84 • 1.2.3. Recommendations for Bahrain 93 6 1.3. GCC Economic Integration as a Vehicle for Diversification 95 • 1.3.1. GCC Economic Integration: A Descriptive Overview 95 • 1.3.2. Recommendations 99 1.4. Summary and Recommendations 101 2. Getting Ready for the Economy of the Future 104 2.1. Challenges and Opportunities for Improved Education Quality and Relevance 106 • 2.1.1. Overview of the Educational System in Bahrain 106 • 2.1.2. Domestic Educational Performance 108 • 2.1.3. Bahraini Students’ Performance Compared to Its GCC peers 116 • 2.1.4. Moving Towards Improved Education Quality 120 2.2. Innovation and Information Technology as Drivers of Growth 124 • 2.2.1. General Principles 124 • 2.2.2. Innovation and ICT in Bahrain 130 • 2.2.3. Recommendations for Bahrain 139 2.3. Summary and Recommendations 142 3. National Finance, Macroeconomic Stability, and Opportunities from Alternative Financing 144 3.1. Options for Macroeconomic and Financial Sustainability and Resilience 146 • 3.1.1. Fiscal Balance: Theory 146 • 3.1.2. Bahrain’s Fiscal Situation 149 • 3.1.3. Recommendations for Bahrain 158 3.2. Opportunities and Challenges from Islamic Finance in Bahrain’s Economic Growth 160 • 3.2.1. Islamic Finance: A Primer 160 • 3.2.2. Islamic Finance in Bahrain 163 • 3.2.3. Recommendations 169 3.3. Summary and Recommendations 171 7 4. Sustainable Energy: Renewable Energy as a Complement to Hydrocarbons 172 4.1. The Opportunities from Renewable Energies 174 • 4.1.1. An Overview of the Energy Sector in Bahrain 175 • 4.1.2. Energy Demand 180 • 4.1.3. An Action Plan for the Future 182 4.2. Environmental Sustainability and Its Growth Dividends 186 • 4.2.1 Land 186 • 4.2.2. Water 190 • 4.2.3. Air Quality 192 • 4.2.4. Biodiversity 194 • 4.2.5. Key Environmental Challenges 196 • 4.3. Summary and Recommendations 197 5. Further Improving Opportunities and the Distribution of Resources 200 5.1. Women and the Bahrain Economy 202 • 5.1.1. The History of Women’s Participation in the Bahraini Society 202 • 5.1.2. Women in the Workforce and as Entrepreneurs 205 • 5.1.3. Marriage, Education and Job Opportunities 210 5.2. Migrant Workers and the Bahrain Economy 213 • 5.2.1. Preamble 213 • 5.2.2. How Much Do Migrant Workers Benefit? Remittances in Bahrain 216 • 5.2.3. Major Policy Initiatives 221 • 5.2.4. Future Directions 226 5.3. Summary and Recommendations 228 8 Conclusion: Policy Options for the Future Bahraini Economy 230 Recommendations Master List 232 • Economic Diversification 232 • The Economy of the Future 233 • National Finance and Macroeconomic Stability 234 • Sustainable Energy 234 • Improving Opportunities for All 235 Synthesis 236 List of Background Papers 242 References 244 Statistical Annex 260 Table A1: Bahrain HDR Components 263 Table A2: Demographic Trends 264 Table A3: Health 264 Table A4: Education 266 Table A5: Gender 268 Table A6: Work Employment Vulnerability 268 Table A7: Income 269 Table A8: Mobility and Communication 270 Table A9: Trade and Financial Flows 270 Table A10: Environmental Sustainability 270 Table A11: Human Security 271 Table A12: Human Rights 271 9 10 The findings, analysis, and policy recommendations of this Report are those of the authors, and do not necessarily represent those of the United Nations Development Programme or of Derasat. Copyright 2018, Derasat and United Nations Development Programme, Bahrain. All rights reserved. First published in November 2018. Any part of this publication may be quoted, copied, or translated by indicating the source. No part of this publication may be used for commercial purpose without prior written permission. 11 REPORT CONTRIBUTORS Project Board Members - HE Dr. Sh. Abdulla bin Ahmad Al Khalifa (Chairman, Derasat, Bahrain) - HE Mr. Amin El Sharkawi (Resident Representative, UNDP Bahrain, Bahrain) Authorship Team (full bios below) - Dr. Craig Naumann - Dr. Omar Al-Ubaydli - Ms. Ghada Abdulla - Eng. Abdulla Alabbasi Statistics Team - Ms. Maha Sabt (Chief of Social and Environmental Statistics, IGA, Bahrain) - Dr. Abdel-Hameed Nawar (Associate Professor of Economics, Cairo University, Egypt) Peer Reviewers - Dr. Adel Abdellatif (Senior Strategic Advisor, UNDP Regional Bureau for Arab States, USA) - Mr. Jonathan Hall (Policy Specialist, UNDP Human Development Report Office, USA) - HE. Prof. Riyadh Hamza (President, University of Bahrain, Bahrain) - Dr. Hashim Hussein (Head of UNIDO-ITPO, Bahrain) - HE Amb. Ronald Neumann (President, American Academy of Diplomacy, USA) - HE Dr. Samira Omar (Director General, Kuwait Institute for Scientific Research, Kuwait) - Dr. Thangavel Palanivel (Deputy Director, UNDP Human Development Report Office, USA) - HE Mr. Adam Sieminski (President, King Abdulla Petroleum Studies and Research Center, Saudi Arabia) Derasat - Sh. Nayla Al Khalifa (Director of Communications and Knowledge Management, Derasat, Bahrain) - Ms. Carrie Bell (Communications and Knowledge Management Supervisor, Derasat, Bahrain) - Mr. Munther Buhindi (Communications and Knowledge Management Supervisor, Derasat, Bahrain) UNDP Bahrain - Mr. Stefano Pettinato (Deputy Resident Representative, UNDP, Bahrain) - Ms. Sumaya Almajdoub (Research Consultant, UNDP, Bahrain) - Ms. Sabeeka Alshamlan (Programme Manager, UNDP, Bahrain) - Ms. Hanan Abu Hadba (Programme Associate, UNDP, Bahrain) Background Paper Authors - Mr. Abdulaziz Al Doseri (Research Analyst, Derasat, Bahrain) - Dr. Aisha Bushager (Assistant Professor of Information Technology, University of Bahrain, Bahrain) - Dr. Atef El Shabrawy (Development, Finance, and Innovation expert, Bahrain) - Dr. Erik Jones (Director of European and Eurasian Studies, Johns Hopkins University, USA) - Dr. Hanan Albuflasa (Assistant Professor of Physics, University of Bahrain, Bahrain) 12 - Dr. Jarmo Kotilaine (Director of Market Intelligence and Impact, Tamkeen, Bahrain) - Dr. Karen Young (Resident Scholar, American Enterprise Institute, USA) - Dr. Rasheed Sbia (Macro-Fiscal Advisor, Ministry of Finance, UAE) Captions Contributors - Mr. Abdulaziz Al Jouf (CEO and Founder, PayTabs, Bahrain) - Dr. Asma Abahussain (Professor of Earth Sciences and Environment, Arabian Gulf University, Bahrain) - Mr. Bashar Fakhro (Chairman, Bahrain Youth Pioneer Society, Bahrain) - Ms. Hadyah Fathalla (Executive Director, C5 Accelerate, Bahrain) - Dr. Irene Margaret Xiarchos (Economist, Food and Agricultural Organization of the UN, Egypt) - HE Mr. Khalid Al-Rumaihi (CEO, Bahrain Economic Development Board, Bahrain) - Ms. Leena Al Olaimy (Cofounder and Managing Director, 3BL Associates, Bahrain) - Dr. Mark Dimech (Officer in Charge and FAO Representative, Food and Agriculture Organization of the UN, UAE) - Dr. Mohamed Ahmed (Policy Officer, Food and Agricultural Organization of the UN, Egypt) - HE Shaikh Mohammed bin Khalifa bin Ahmed Al Khalifa (Minister of Oil, Chairman of the board of directors in NOGA) - Ms. Nada Alawi (Founder and Creative Director, Annada, Bahrain) - Dr. Odeh Al-Jayyousi (Head of Department of Innovation and Technology, Arabian Gulf University, Bahrain) - HE Mr. Sami Dimassi (Director and Regional Representative, West Asia Office, UN Environment) - HE Mr. Samir Aldarabi (Director, UN Information Centre for the Gulf States, Bahrain) - Mr. Soubah Al-Zayani (Chairman, Future Society for Youth, Bahrain) - Eng. Suzan AlAjjawi (Acting Director of Environmental Policies and Planning, Supreme Council for the Environment, Bahrain) 13 14 ACKNOWLEDGEMENTS Many organizations assisted us in producing this report, but we would like to express our sincere appreciation to three organizations in particular that made a huge difference. The first is the Information and eGovernment Authority (IGA), which was the main driver of the data acquisition and processing efforts. The second is Tamkeen, who provided generous financial support that was critical to the project’s success. The third is the Ministry of Foreign Affairs, who facilitated communications between Derasat and the community of UN organizations inside and outside Bahrain. We would like to thank the following organizations (listed alphabetically) for being highly constructive stakeholders in the process of producing the report: the Bahrain Authority for Culture and Antiquities; the Bahrain Chamber of Commerce and Industry; the Bahrain Economic
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