Unlocking Bhutan’s Potential: Measuring Potential Output for the Small, Landlocked Himalayan Kingdom of Bhutan

Publication | November 2014
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While Bhutan’s economic growth over the past 3 decades has averaged more than a remarkable 7.9% per annum, its growth has simultaneously been highly volatile.

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Bhutan’s rapid economic growth has been driven principally by the hydropower sector. A key challenge is to channel the income generated by this sector for sustainable and inclusive growth. This paper develops a macroeconomic model of Bhutan’s potential output and analyzes the impact of several policy options on potential growth for Bhutan over 2013–2030. The results show that while hydropower development will underpin future growth, more investment in education and health as well as efforts to diversify Bhutan’s economic base through the promotion of tourism and other niche sectors can yield a much higher potential output.

Contents

  • Abstract
  • Introduction
  • Bhutan's Structural Transformation
  • Model, Estimation Technique, and Data
  • Results and Growth Simulations
  • Conclusion
  • Appendix
  • References

Additional Details

Authors
Type
Series
Subjects
  • Economics
Countries
  • Bhutan
SKU
  • WPS175052-2

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