His Highness Sheikh Salman bin Hamad Al-Khalifa has been a leading political figure in Bahrain since being named crown prince in 1999. Yet Sheikh Salman is arguably best known internationally as chairman of the country’s Economic Development Board, the government agency responsible for formulating and overseeing economic strategy and attracting inward investment.

During the past six years the Western-educated Prince Salman has been at the heart of an ambitious program of economic and political reform—a series of initiatives that has helped spur diversification and growth, eased communal tensions, and enabled the island nation to respond to growing competition from its resource-rich neighbors. Whereas Bahrain was the first state on the Arab side of the Gulf to exploit its hydrocarbon resources, in the early 1930s, its fast-dwindling reserves now mean it will be the first member of the Gulf Cooperation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—to run out of oil.

Landmarks of economic liberalization thus far have included the deregulation of the telecommunications industry, fundamental reform of the labor market, the privatization of key industries, and the negotiation of bilateral and multilateral trade agreements with nations in the Middle East and beyond. Employment growth...