Due to the relative early discovery of oil in Bahrain, the country's level of urbanization has, for long, been one of the highest in the world. In the 1940's already around 70% of the 90.000 people lived in urban areas. In the early 1990's the pollution had grown to a total of approximately 509.000 of which the major share of 450.000 was classified as urban. A truly very high rate of Urbanization. The country's population totaled almost 650.000 in 1998, an increase of 3.6% over the 1997 population and a staggering increase of 26.6 % since the 1991 census. It is expected that this figure will grow to a little over 1.2 million people in 2021 and reaching around 1.8 million in the year 2041 . These figures combined with a stable rate of urbanization, will further reinforce 'urban' as the most dominant sector in Bahrain.

The oil revenues have been a major source of government revenues, however over the last two decades this has been steadily declining. In 1980, the contribution of the oil sector amounted to 33.3%, which declined in 1985 to 19.8% and in 1995 to 15.8%. It is expected that if oil production continues at the present rate, oil reserves will be depleted in around 10 years.

Realizing this, the government has made great efforts in diversifying the economy thus diminishing the dependency of Bahrain on its oil revenues. Through these efforts in particular the finance, commerce and service sectors have significantly strengthened. On the whole, the contribution to the national economy of these sectors have increased from 40% in 1980 to approximately 50% presently .

Over the last few decades Bahrain has used an important portion of its revenues to set up a proper infrastructure (including physical) to deal with further changes in its economy. It has also made enormous efforts in assisting the population in the fulfillment of its economic, cultural and social needs (including housing).