Oil has been the mainstay of Bahrain's economy ever since large-scale drilling and processing began in the 1930s. Petroleum production and processing account for about 60% of exports. But because Bahrain's oil reserves are small compared to those of other countries in the Gulf, the country has made great efforts to diversify its economy. 

Bahrain's other industries include aluminum smelting and paper milling. There is also a thriving shipbuilding and repair industry. Since Bahrain has highly developed communication and transport facilities, and one of the most advanced electrical systems in the Gulf, the country has attracted many multinational firms with business in the Gulf. Most Arab financial institutions, many international banks and branches of foreign insurance companies have offices in Bahrain. Bahrain also has more than 60 offshore banks. These are banks that do not engage in local banking services, but provide services to people and institutions in other countries.

The traditional industries of Bahrain are now carried out only on a small scale. Before oil was discovered, pearling was the primary industry for thousands of years. However, when the Japanese developed cultured pearls in the 1930s, the international market for natural pearls collapsed.

 The island of Sitra is the base of the commercial fishing industry. Fish such as hamour (a type of grouper) and shrimp are caught by fishermen in hadra (traps made of netting, laid out to form a long wall). Recently, commercial fishing has been threatened by the contamination of the Gulf waters, much of it caused by runoff from Kuwaiti tankers bombed during the Gulf War.

The craft of boat building is carried on today much as it has been for centuries. Dhows, the local wooden fishing boats, are built by craftsmen, and each boat is unique.

 The causeway between Saudi Arabia and Bahrain has led to an increase in tourism. More than two million people visit Bahrain each year, mostly from Kuwait and Saudi Arabia. Tourism constitutes almost 10% of the gross domestic product and employs about 17% of the workforce.

 Women usually work in teaching, nursing, social services, financial services and clerical positions. A few women work as managers, doctors or government officials.

Unemployment has become an increasing problem as heavy industry employs Pakistani, Indian and Filipino workers, leaving many of the younger population without work. This has led to a number of demonstrations against the government.
  Did you know?

Bahrain was the first country in the Arabian Gulf in which oil was discovered. It was originally discovered in 1902, although it was not fully exploited until the 1930s.