Bhutan pumps 20% of its GDP into health and education. Ninety per cent of the population has some form of health coverage, and the UN’s World Food Programme is readying to exit the country.
Bhutan pumps 20% of its GDP into health and education. Ninety per cent of the population has some form of health coverage, and the UN’s World Food Programme is readying to exit the country. So, is a developed nation one that has a high GDP, or one like Bhutan, which refuses to accept that consuming more and producing more is the road to happiness?
I am staying at a hotel that is quite cheap. My room overlooks the main town square and in the morning the sun is bright in the windows. Most guests at the hotel are travelling local people and an occasional government official looking to save some money. One of the rooms is being shared by Indian priests. During the day I see them walking up and down the main street wearing white dhotis with red borders, sometimes a small stretch of thermal underwear visible at the ankle. I assumed they were in Thimpu to minister to the religious needs of the few local and Indian Hindus. But they’re actually here to tell the fortunes of the local people, predominantly Buddhists. They are much respected and sought after for their abilities. I assume that their services must be quite expensive compared to the Indian street fortune-tellers if they can afford the trip and stay at the hotel. But apparently they charge very little, and make most of their money by selling stones and holy artefacts guaranteed to change a person’s luck. In their prophecies, they always insert a suggestion concerning the necessity of buying one of those lucky objects.
It’s really quite similar to the development game, with the richer nations telling the poorer ones that certain actions – all connected with pushing up GNP and GDP -- will guarantee them a bright future. But following these prescriptions seems only to be making the rich countries richer, which those labelled poor are still searching for economic nostrums to get ahead.
The measurement of Gross National Product (GNP) or Gross Domestic Product (GDP) is supposed to show how well a country is doing. GNP as an indicator is based on the premise that economic activity (trade) promotes economic growth and that in turn promotes employment, resulting in income. When people have more money to spend, they need more things to spend on, thus causing ‘consumer choice’ or demand. As a result, a better or more efficient resource allocation occurs, leading to more economic activity. This endless upward escalator ride is what all countries want. Countries with low economic activity like India or Bhutan can be kick-started by providing them development aid. High GNP countries give aid to low GNP countries, and then measure their progress in terms of the rate of growth of GNP. The former, the big boys, also feel they have the right to tell the latter what they need to do to become like them. The little guys usually have to take the advice or the aid will stop.
Bhutan ’s decision to choose Gross National Happiness (GNH) over Gross National Product is a refusal to get on the escalator, and worse, a refusal to play the games the big boys’ control. This should be read in the context of Bhutan ’s average per capita income, which is Nu 1,200 per month – less than US $1 per day. This is not a rich country.
Rather than talking to economists alone, I spent time in Bhutan talking to people working in health (primarily water and sanitation), education, food and environment; areas that are fundamental to questions of development in South Asia. “Bhutan pumps 20% of its GDP into health and education, in spite of the fact that many ‘experts’ said this was not a tenable position,” Dr Rinchen Chopel, executive director, National Commission for Woman and Children, points out. “Now nearly 90% of the country has some form of health coverage.” Look at the payoffs: a bout 78% of Bhutanese villages have access to health facilities within two hours walking distance, and about 89% have such services within three hours walking distance. Primary healthcare and education is free to all. About 69% of schoolchildren complete at least seven years of primary school. Life expectancy jumped from around 35 years to 66 years in 40 years. The country has 72% forest cover. And Gerald Daly, country director of the UN’s World Food Programme in Bhutan , cheerfully tells me that he thinks they should be out of there in seven years, they will not be needed after that.
The fact that the country’s average income is low and that it is a primarily rural, agrarian society is perhaps not a barrier to providing a better quality of life to all. Yet Bhutan is known as a ‘least developed country’ because it has a low GDP. If everything else is going well, can we get rid of GDP and the tags that come with it? Activists, aid organisations and even governments are beginning to question the validity of GNP as a useful measure of development. GNH seems like a plausible replacement. “GNH has become a ‘sexy’ thing,” says Kinley Dorji, editor-in-chief of the Kuensel, Bhutan ’s biweekly and only newspaper. “It’s not just some quirky thing a small country is doing. We have been getting a lot of attention because of it. And this is a good thing because it shows people in other countries are dissatisfied with their lifestyles and that we are doing something right.”
Since its introduction during World War II as a measure of wartime production capacity, GNP has been used by politicians, economists and international agencies as an indicator of a nation’s economic health and well-being. GNP measures the monetary value of goods and services produced by a country and its citizens, that is, the total ‘business’ a country does. GDP is slightly different; it measures the total value of the goods and services in the country only and does not count the companies that the country’s people may own in other countries. Bhutan ’s economy is growing at approximately 7% a year.
The major problem with these measures is that there is no real connection between the well-being of a population and GDP; the assumption that development in other fields like health, general education, equity and democracy will follow economic growth is just an assumption and seems to have been proved wrong many times. It is also often forgotten that GDP is merely a total of goods and services bought and sold, with no distinctions between those that add progress and those that subtract from it. GDP ignores everything that happens outside the realm of monetised exchange, regardless of its importance to well-being. In the West, this means that ordinary but fundamental functions such as housework or volunteer work are ignored; but in less developed countries in Asia this also includes all forms of barter or property rights exchanges which rural people depend on. These are not considered to contribute to GDP and hence do not exist for decision-makers. Related to this, GDP ‘hides’ the breakdown of society and culture. Some obvious examples: crime adds millions of rupees to the GDP due to the need for prisons, locks, security measures, increased policing, property damage, and medical cost. Divorce is also good because it boosts lawyer's fees, buying second homes, and child support. GDP also says nothing about disparities in wealth -- a country could have a few very rich people and lots of poor ones, but this distinction would escape the GDP calculation.
One of the aspects of GDP that is increasingly being seen as problematic is its extremely odd effect on the environment. GDP treats the depletion of natural capital as income, rather than loss, so the more the nation depletes its natural resources and uses them in intensive economic activity the more the GDP goes up. The GDP also goes up when companies pollute to produce their goods and again when they or the government have to clean up! Pollution is a double benefit for the economy, which it obviously should not be. Further, if today’s economic activity depletes the environment which may be needed tomorrow, it is just borrowing from future generations, not actually building capital.
In Bhutan two ways in which Gross National Happiness supercedes Gross National Product are immediately noticeable by an Indian traveller – the very few TV channels, and the lack of cigarette shops. TV was only introduced in Bhutan in 1998. As Kinley Dorji says, “It increased what was available in the shop, shopkeepers as well as buyers realised what was out there, and suddenly the shelves were full of things.” Business was good. But the government decided to limit the number of channels available because they were felt to be a corrupting influence, even though more channels would mean more business, both for the channels, cable operators, and advertisers.
Then last December, on its national day, Bhutan banned the sale of tobacco and smoking in public places. Taxes on tobacco are a sizeable chunk of a country’s revenues, in India they amount to more than 3% of total revenues. So though countries may ban cigarette advertising and demand warning signs on cigarette packs, very few have the guts to actually ban tobacco. Bhutan has.
Aid is another reason why countries are interested in GDP. As mentioned earlier, rich countries give aid to poorer countries. For instance, India gets bilateral aid from individual countries, and from multilateral donor agencies. Since it gets aid, the uneducated guess would be that India does not have enough money to look after itself. Yet it gives aid to Bhutan ; the first two five-year plans, which were the actual start of infrastructure development in Bhutan , were fully financed by India . As many people here say, off the record, that without India there would not be a modern Bhutan . India is the country’s chief trade partner, electricity is produced by hydroelectric power plants built with Indian help, most hospitals are financed by India , and the roads are built by the Indian army, whose presence is easily noticed.
India pumps money into Bhutan because a stable, modern Bhutan on the border with China is useful for it. Like the advice given by the priests, this is one of the primary reasons aid is given by a country -- it is good for the country that gives it. Geopolitics and the fact that a country with low GDP but with a growing economy provides markets for high GDP countries are the key factors here. In many cases aid is actually ‘tied’: the aid money has to be spent on goods and services bought from the donor country. In the last few decades, aid has often been given by agencies like the World Bank only if a country is willing to open its markets to other countries. Much aid is in the form of loans, putting a country in debt as it tries to pay back the interest and the principal.
Most countries eager for aid acquiesce to such conditions, but a few say no. Bhutan rejected a World Bank loan to build a hydroelectric dam because it would have destroyed a part of a beautiful protected area. Can a country that is poverty-ridden afford to say no to loans? Recent research into the political economy of development is actually questioning the definition of development and poverty: are people who have enough to eat, shelter, and enough work, poor just because they do not have cars and TV sets?
In Thimpu, there is no shortage of cars or TV sets. At night all the shopping arcades lining the main street are brightly lit up, with lots of small shops which seem to be selling identical things -- jeans, shoes and small electrical goods, imported from India, Bangladesh, Thailand and China. Wandering the streets of Thimpu I also came across this picture-perfect sight of an older woman shopkeeper, turning a prayer wheel in one hand while her eyes were glued to a TV screen showing an Indian soap opera.
InfoChange News & Features, May 2005