The tiny and largely isolated nation of Bhutan was governed by Britain, with little interference in its domestic affairs, from 1910 until 1947, when official governance was transferred to India. In 1949, India and Bhutan signed the Treaty of Peace and Friendship which, similar to the prior Britain-Bhutan arrangement, outlined minimal Indian influence in Bhutan aside from matters of foreign policy.
One major social issue facing the nation is the estimated 100,000 Bhutanese seeking refuge in neighbouring Nepal. Ninety percent of the refugees, who are victims of ethnic conflict in the south of the country, are housed in seven United Nations Office of the High Commissioner for Refugees (UNHCR) camps. Bhutan is a constitutional monarchy, and the predecessor and father of the current king, Jigme Khesar Namgyel Wangchuck, created and implemented the concept of GNH (Gross National Happiness) as its national philosophy. GNH has become internationally known for its unique approach in declaring that economic measurements alone are not sufficient in evaluating a nation, and that other measures such as contentment of its people and environmental conservation should be considered.
Bhutan’s economy remains one of the smallest and least developed in the world. It is primarily based on agriculture and forestry, which provides for the livelihood of more than 60 per cent of its population. A harsh terrain makes the building of roads and other infrastructure difficult and expensive. Bhutan’s economy is closely associated with India’s with strong trade ties and an overall dependence on its financial assistance.
Still, hydroelectricity and construction continue to be the two major industries of growth for Bhutan. Hydropower exports to India have boosted Bhutan’s overall growth, and India has committed to funding more such projects. Education, social and environment programs are underway with the support of multilateral development organizations. The Bhutanese government’s desire to protect the country’s environment and cultural traditions are being taken into account in this process.
Bhutan’s is also developing the tourism sector. However, the government remains cautious in this area, encouraging upscale and environmentally conscientious tourists through restrictions on visitor numbers and minimum per-day spending requirements.
Bhutan has applied for membership in the World Trade Organization and became a member of the United Nations in 1971. It has generally cordial international foreign relations, in particular with India.