Bhutan’s Unique Approach to Economic Development

Bhutan is a small Himalayan country nestled between economic giants India and China. Despite its tiny size and remote location, Bhutan has charted its own unique path when it comes to economic development. Rather than pursuing rapid GDP growth at any cost like most countries, Bhutan instead prioritizes “Gross National Happiness” over pure economic metrics. This alternative approach manifests in numerous policies that seem to defy traditional economics.

Tourism Policy Focused on Exclusivity Over Volume

Bhutan strictly limits and prices out mass tourism, instead catering only to an ultra wealthy elite. The daily fee per tourist is $200. A week’s stay for a couple easily exceeds $2,800 before considering transport and lodging. The country’s largest resort offers rooms starting at $3,000 per night. For comparison, the average Bhutanese citizen earns just $235 per month.

By restricting tourism to such an exclusive niche, Bhutan misses out on billions in potential revenue. But economic prosperity is not the priority. The goal is minimizing disruption to Bhutan’s environment and culture. With only 5,000 visitors per month, most Bhutanese will never interact with tourists.

Investment Focused on Long-Term Potential Over Short-Term Returns

Another example is Bhutan’s infrastructure investment strategy. The mountainous terrain makes transport infrastructure extremely difficult andexpensive. Instead of fruitlessly trying to industrialize, Bhutan has focused investment into hydropower dams. These now produce surplus electricity which is exported to India for profit. Bhutan has also used this cheap renewable power to mine Bitcoin and other cryptocurrencies.

These long-term focused investments have left Bhutan with quite high debt levels by developing world standards. But the profitability of electricity exports allows Bhutan to reliably service this debt while also raising citizen’s standards of living.

Good Governance and Anti-Corruption Efforts

Despite being a small undeveloped economy, Bhutan ranks as the 25th least corrupt nation. This exceptional performance for its income level can be partly attributed to the general deprioritization of rapid economic enrichment in politics and business. When material wealth accumulation is not seen as the supreme goal, there is less incentive for graft.

The Way Forward

Bhutan shows that incorporating alternative metrics like environment, culture and happiness into policymaking can produce positive outcomes. Its people enjoy clean air, unspoiled nature and strong communities. But poverty remains widespread and Bhutan is dependent on India and international aid. As the world develops around it, Bhutan may have to gradually shift towards a more balanced model that allows for some additional economic growth and wealth creation.