Socio-Economic Developments

Overall Development Philosophy

Bhutan’s overall development philosophy is expressed in the phrase Gross National Happiness (GNH). GNH was conceived by His Majesty the Fourth King as, in the words of the Prime Minister of Bhutan, the beacon of Bhutan in its search for greater well being GNH essentially propounds a harmonious balance between material well-being and the spiritual, emotional and cultural needs of an individual and the society. Its emphasis is less on the quantitative measurement of Happiness itself, but rather as a constant reminder of the essence of development. Four strategies have been identified, called the four pillars, to guide the realization of GNH. These are  sustainable and equitable development, cultural preservation and promotion, environmental conservation, and good governance. These components continue to provide the broad strategic framework for national development priorities and processes.

Social developments

Since the introduction of planned social and economic development in the early 1960s, Bhutan has made tremendous improvements in the quality of life as shown by these social indicators: life expectancy has increased from 42 years in the 1970s to 66 years, basic health coverage has reached 99% and both infant and maternal mortality rates have been drastically reduced. There is a significant difference in the adult literacy rate (53%) and the current school enrollment pattern (the net primary school enrollment has expanded to 91.5%), reflecting the growing accessibility to schools and the importance attached to getting a modern education.

Economic Growth

A large majority of people of Bhutan are farmers and herders. Although urban centers are growing and modern amenities have arrived, over 69% of the people live off their land. Therefore, while the contribution of agriculture to the Gross Domestic Product is on the decline (from 52% in 1980 to 18.6% in 2008), it is the most important source of livelihood for the majority of the Bhutanese. Our traditional farming system is subsistence in nature and integrates crop production, livestock production and forest products. Because of our pristine environment and the late introduction to chemical fertilizers and pesticides, an important objective of the renewable natural resource sector is to create a niche market for organic products from Bhutan.

Bhutan’s GDP growth since 1980 has averaged 7% per annum, mainly propelled by the hydro power sector. While the share of contribution of the agriculture sector to the economy has declined, the secondary (43.3% in 2008) and tertiary sectors (36.4% in 2008) of industry, construction and services have increased. This trend shows a structural shift in the Bhutanese economy.


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