On 16th December, Bahrain celebrates national day amid mixed ranking of its economy in international indexes. Ranking is crucial for Bahrain, as the country struggles to overcome the socio-political challenge emerging in February 2011.
The article compares performance of Bahrain’s economy to fellow member states of Gulf Cooperation Council (GCC). To be sure,
Bahrain ranks ahead of GCC countries in several indexes in relation to economic freedom and information and communication technologies (ICT). Conversely, Bahrain’s economy lags behind in areas of competitiveness and credit rating.
On a positive note, Bahrain achieved a ranking number 12 on the 2012 Index of Economic Freedom, an impressive accomplishment by virtue of being of many European countries. The same report ranked Qatar number 25 internationally or the second best amongst GCC economies.
The Heritage Foundation and the Wall Street Journal, with their conservative perspectives, stand behind the report that regards governmental involvement in the economy as something negative for causing displacement of scare resources. The index uses results of ten variables including government size, property rights plus business freedom.
Also, Bahrain is regarded as the seventh freest economy worldwide on 2012 on Economic Freedom of the World report, issued by the Frazer Institute of Canada. In turn, the report regards the UAE as 11th freest economy worldwide, not far from Bahrain.
The report relies on a sizable number of variables in turn grouped into five broad areas, namely 1) size of the government in terms of expenditures, taxes and enterprises; 2) legal system and property rights; 3) sound monetary policy; 4) freedom to trade internationally; and 5) regulation of credit, labour and business.
As to ICT, Bahrain emerged number 27 worldwide on the Global Information Technology Report 2012, in turn issued by the World Economic Forum and the business school of INSEAD. The report ranks reviewed countries on the basis of their achievement on the Network Readiness Index (NRI), in turn derived from 10 pillars like affordability and infrastructure of ICT.
For their parts, Qatar and the UAE achieved rankings of 28 and 30, respectively, certainly not far from Bahrain’s position. Undoubtedly, Bahrain’s achievement partly reflects small size of the country and hence the ability of developing the necessary infrastructure. At around 760 square kilometres, Bahrain is the smallest county in the MENA region.
On a negative note, Bahrain lags behind other GCC countries save Kuwait with regards to economic competitiveness. The Global Competitiveness Report 2012-13, published by the World Economic Forum assigns ranking number 35 to Bahrain. Yet, Qatar is ranked as the 11th most competitive economy in the world, the best in the Middle East and North Africa region.
The report ranks countries on the basis of their performance on the Global Competitiveness Index (GCI). To its credit, GCI is noted for undertaking a comprehensive look into reviewed economies by relying on a set of variables entailing macroeconomic stability, labour market efficiency, and business sophistication.
On a separate note, Standard & Poor’s assigns sovereign rating of BBB to Bahrain, as such the least promising amongst GCC countries. Worse, Bahrain is on S&Ps’ credit watch, thereby carrying threats of downgrading. The rest of GCC countries enjoy different A-level categories of S&P.
Altogether, the results demonstrate Bahrain’s capability of achieving exceptional performance notably in the area of economic freedom. Clearly, the way forward for Bahrain requires solidifying its position as being open for business.
Other qualities for Bahrain include having an educated local workforce, willing to accept employment in almost all kinds of jobs. The same is not necessarily true of all other GCC member states.
The writer is a Member of Parliament in Bahrain.
