Political economy of transition of Brunei Darussalam: Towards retardation or development?

Brunei is one of those tiny economies of Southeast Asia with abundant reserves of oil. It is this oil and natural gas that have contributed to the wealth of this Islamic kingdom. However, with the reserves of oil and natural gas projected to run out in two or three decades, there have been efforts to diversify and develop the economy of Brunei. It is in this backdrop that we try to analyse the prospect of economic transition of this tiny economy. While there are many ways of bringing transition, we must note that Bruneian economy has a lacuna, namely, inadequate skilled labour force of its own. In addition, there are serious political and economic issues, such as the suppression of democratic rights of people, decline in the growth rates of Gross National Product (GNP) per capita as well as population, huge military spending, and decline in the share of agriculture and manufacturing in GDP. In this article, we purport to analyse the prospects for economic transition of Brunei in a political economy perspective. The first part discusses the political history of Brunei; the second section presents the relative strengths and weaknesses of its economy; then the paper analyses the trends in macro-economic aggregates of Brunei; and finally, it presents the conclusions of the study with reference to possibilities of its transition.