COUNTRY BACKGROUND - Gross National Happiness Commission

Economic Performance
development was generally faster in Southern and Western Bhutan than in the East.
III. Economic Development during the 1980sIII. Economic Development during the 1980s
Availability of DataAvailability of Data
2.6 The availability of economic data in Bhutan is variable. Consistent GDP series begin only in 1980, and the
most recent year for which GDP estimates were available when the Plan was prepared, was 1989. This means that
broad economic data were available only for the first half of 6FYP, although figures relating to public finance and
foreign exchange were available for the whole period. Other areas where statistics are especially weak include
employment and labour force data, trade, and production in the traditional sector (which accounts for almost half of
all production).
Table 2.1 GDP Sector Shares and Growth Rates 1980-1989
Structure of GDP in 1980Structure of GDP in 1980
2.7 Although economic development had taken place since the 1960s, at the beginning of the 1980s, agriculture
remained the most important sector in terms of GDP and employment: contributing 56% of GDP as shown in Table
2.1. Other significant sectors were trade and the activities of the Royal Government in the economy, each
accounting for 11% in 1980. Development of the industrial sector was constrained by lack of investment due to the
emphasis of Government expenditure on infrastructure and the lack of entrepreneurial skills and thus accounted for
less than 4% of GDP, with about half the contribution from the construction industry. The lack of geological
information and necessary technical expertise limited the development of the mineral sector, which accounted for
only 0.6% of GDP in 1980. The power sector accounted for only 0.2% of GDP in 1980.
Growth of GDP in the 1980sGrowth of GDP in the 1980s
2.8 During the 1980s, GDP grew at an average of 7.5% — a very rapid rate of growth compared with most
developing countries during the same period. (These growth rates are assuming constant prices, i.e. the effects of
inflation have been eliminated.) By 1989, GDP was 90% above — almost double — its 1980 level. Assuming a
population growth rate of 2.5%, per capita GDP growth was 5% per annum, with per capita GDP estimated at $370
by 1991. Unlike previous Plan periods, the major impetus for GDP growth was not from increases in aid, but was
largely based on the expansion of the electricity and mining/manufacturing sectors. Starting from a negligible base,
electricity sector growth averaged 65% p.a ( see page 4). This was largely due
2
SECTOR GDP Share 1980 Average Growth
1980—89%
GDP Share
1989
Agriculture 55.7% 5.0% 45.1%
Mining & Quarrying 0.6% 13.8% 1.0%
Manufacturing 3.2% 15.2% 6.0%
Electricity 0.2% 65.4% 10.8%
Construction 7.8% 4.7% 6.3%
Trade etc. 10.9% 1.1% 6.3%
Transport & Communications 4.3% 12.9% 6.7%
Financial Services 6.3% 9.8% 7.7%
Community & Social Services 10.8% 6.8% 10.2%
Source: Central Statistical Office.