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Bhutan, Economy

The United Nations (UN) classifies Bhutan as one of the world’s least developed nations. The country is predominantly agricultural with limited industrial activity and services. Agriculture, animal husbandry, and forestry employ 94 percent of the workforce and contribute 33 percent of gross domestic product (GDP). GDP was $487 million in 2000.

Agriculture in Bhutan is primarily devoted to the cultivation of cereal crops to meet subsistence needs. Rice, corn, barley, millet, and wheat are the main crops. Farming methods are generally traditional and labor intensive. Only 3 percent of the land area (140,000 hectares/345,948 acres) is cultivated. Animal husbandry is also practiced, with cattle, yaks, pigs, goats, sheep, and horses most commonly raised. A state-owned logging corporation handles commercial logging in Bhutan; oak, pine, and tropical hardwoods are the main species harvested.

Bhutan has a large potential for hydroelectric power resources. Only a few dams have been built to date; the largest is the Chukha Hydroelectric Project, which is located in Chukha, between Thimphu and Phuntsholing. Opened in 1986, it produces about $25 million in government revenues each year from electricity sold to India. Similar projects will be undertaken only after the king and his advisers are satisfied that they can be built with minimal damage to the environment.

Trade and other services, including tourism, employ 5 percent of the workforce. While tourism is Bhutan’s largest source of foreign exchange, the country has restricted the number of visitors to minimize the negative impact on Bhutan’s traditions, culture, and natural environment. Only 1 percent of the labor force is employed in manufacturing, construction, and mining. Processed food, cement, and wood products are the most important manufactures.

The first road linking India with the Bhutanese capital of Thimphu was opened in 1962. Since then Bhutan has developed a skeletal road system linking most of the Middle Himalayan valleys. These roads have opened up large areas of central and eastern Bhutan. The roads cut into steep hillsides and mountains; during the rainy season frequent landslides block the roads, and remote settlements revert to the isolation of earlier times. The Bhutan Government Transport Service operates a bus service to all parts of the country. An international airport is located in Paro. Druk Air, Bhutan’s national airline, was founded in 1981 and started flights between Paro and Calcutta (now Kolkata) in 1983; service has since been expanded to include flights to Bangkok (Thailand), Dhaka (Bangladesh), and Kathmandu (Nepal). Modern telecommunications link major towns.

Kuensel, a weekly newspaper owned by the government prior to 1992, is the only newspaper in the country. Bhutan Broadcasting offers short-wave radio programming with daily FM broadcasts in Thimphu.

Bhutan’s major imports include rice, manufactured goods, fuel, and machinery. Major exports include timber; agricultural products such as apples, oranges, and potatoes; handicrafts; spices such as cardamom; precious stones; and electricity. Bhutan’s primary trading partner is India; the country also receives imports from Japan, Germany, the United States, and the United Kingdom, and exports goods to Bangladesh, the Middle East, Singapore, and Europe. Bhutan’s monetary unit is the ngultrum (44.94 ngultrum equal U.S.$1; 2000 average), which has an exchange rate at par with the Indian rupee. The rupee is also an official currency in Bhutan.

 
 

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