Bhutan is a small economy, perhaps the smallest in the world.

A majority of the people in Bhutan are farmers, who practice subsistence farming. Most other people are employed by the government as civil servants, or work in government owned corporate.

Major businesses in Hydropower, Telecom, Aviation and Banking are still owned by government, although part of the shares are owned by the public, and these agencies operate independently.

Major private businesses include Hotels, Malls, Food Processing companies, mining and cement industries, private schools, and construction.

However, the private sector is gradually getting stronger, and there are Banks, Mobile services, and media houses owned by private entities. The first private aviation service launched recently.

Despite the growing private sector, Bhutan’s unemployment rate is at a whopping 4 percent, and has been an issue for worry to the government.

Bhutan’s literacy rate stands at 58 percent, but has been growing rapidly, and almost every child is now in schools in Bhutan.

About 23 percent of the Bhutanese live below the poverty line in Bhutan. More than 90 percent of these people live in rural areas, where they may be able to live off a small patch of land, but are not able to generate any income.

The GDP per capita in Bhutan is estimated to be $5,600 (2008), and has been climbing up steadily.

The national development policy of Bhutan emphasizes on Gross National Happiness, a philosophy that counters the GDP model for measuring progress.

The GNH model has four pillars – Sustainable economic growth, Environment conservation, protecting the cultural heritage, and good governance (political security). The philosophy is that to make true progress, all these factors must be taken into account rather than simply GDP, in order for a country to make progress. These factors are taken as basic components necessary to be able to live a happy life.

These factors are taken into consideration while developing every new policy or plan.

To measure progress in the GNH model a GNH survey has been drawn that would question every individual citizen exhaustively to ascertain the national measure of happiness.

An important part of the Bhutanese economy equation is the great care rendered to the natural environment. Largely mountainous, Bhutan’s pristine forests have been untouched for years, but would have been at a great risk were it not for some enlightened policies. The constitution of the Kingdom of Bhutan mandates that the total forest cover be maintained at a minimum of 60 percent for all time to come- and today, the total forest cover in Bhutan is 72 percent, 40 percent of which is designated protected parks and natural biodiversity corridors.

This law prevents economic development at the cost of the environment, but also protects the two largest revenue generating sectors in the country- Hydropower and tourism.