A Framework of Trade Policy for Bhutan Compatible with the Gross National Happiness

Bhutan highly values psychological aspects of social welfare and well-being by setting requirements for satisfying the threshold of the gross national happiness (GNH) index in making national policy decisions. The GNH index, however, includes factors that are seemingly unfavorable to an active trade policy. One of the most urgent tasks facing Bhutan is to improve general living standards, especially the creation of decent jobs for the young. The country needs to benchmark successful development strategies in other countries, and to recognize that no country can develop an economy without an open trade policy. This paper discusses the relationship between the GNH and trade policy, and tries to analyze trade policy issues of Bhutan: inclusive growth, trade facilitation, incidence of tariffs, and World Trade Organization accession. It explores trade and industry policy that is compatible with the GNH guidelines. It also points out that the structure of the Bhutanese government is less oriented to trade policy than its neighbors, and suggests a new organization for promoting a more active trade policy. It concludes by underlining the importance of an active trade policy for Bhutan.