SEU227 DEVELOPMENT ECONOMICS | GROUP 13

THE POPULATION,
POVERTY AND
INEQUALITY IN BHUTAN

SEU227 DEVELOPMENT ECONOMICS
SEMESTER II, ACADEMIC SESSION 2021/2022
GROUP PROJECT
INSTRUCTOR: DR SITI RAHYLA BINTI RAHMAT

PREPARED BY
GROUP 13

CHONG WEN JIN 156153
CHUA SWEE SIONG 156286

CHUAH KAI YING 150761
HAYATUL MUKMINAH BINTI OTHMAN 156018

HU SANAN 155125
KAM WEN JING 151556
LIANG CHENLING 155071
NURUL NABILAH BINTI MUHAMAD 158098

TABLE OF CONTENTS

1.0 2.0 3.0

Abstract Introduction Literature
Review

4.0 5.0 6.0

Methodology Discussion Conclusion

7.0 8.0

Reference Contribution
of Member

PAGE 01 HU SANAN (155125)

ABSTRACT

This paper focuses on population,
poverty and inequality in Bhutan.
Based on the national background of
Bhutan, located deep in the
Himalayas between China and India,
Bhutan is a smaller country. Bhutan's
economy is heavily dependent on the
secondary and tertiary industries,
and its per capita income is in the
low and middle country income
category. According to the
demonstrationand arrangement from
second-hand data and previous
papers, this paper is divided into
three parts to discuss, namely
Population, Poverty and Inequality.
Bhutan's population accounts for an
extremely low proportion of the
world's population. Bhutan's poverty
rate continues to decline and
people's living standards continue to
improve. At the same time, there are
still obvious inequalities in Bhutan.

KAM WEN JING(151556) PAGE 02

KINGDOM OF BHUTAN

INTRODUCTION

The Kingdom of Bhutan, the least development
countries (LDCs) group in
which can be translated 2023.

into ‘Land of the Thunder

Dragon’, is a relatively

small country located deep Bhutan's Economic

in the Himalayas between Development Policy (EDP)

China and India with a was launched on 31st March

population of 771,612 in 2010 and aims to attain

2020. The tiny landlocked economic self-sufficiency

nation is surrounded by and is also still directed by

gigantic glaciers and has a the core framework of GNH.

total area of 46,500 km² The economic structure of

(Tourism Council of Bhutan, Bhutan was dominated by

2022). Over the decades, the primary sector such as

the nation is well-known for agriculture from the 1980s

its Gross National to the 1990s. Since 2000,

Happiness (GNH), which is the Royal Government of

consisted of four Bhutan achieved a balanced

components: sustainable structure in every sector

economic development; while after the 2010s, the

preservation and promotion economy of Bhutan heavily

of culture and tradition; relied on secondary and

conservation of tertiary sectors specifically

environment as well as good construction; electricity

governance (Royal and water supply; and also

Government of Bhutan, wholesale and retail trade

2016). Based on the study (Royal Government of

reported by Razzaque, M. A. Bhutan, 2016). With a per

(2020), Bhutan passed the capita income of US$3000.8

evaluations in two United as of 2020, Bhutan falls in

Nations triennial reviews in the low-middle income

2015 and 2018 and is country category (The

expected to graduate from World Bank, 2022).

HAYATUL MUKMINAH BINTI OTHMAN PAGE 03
(156018)

3.0 LITERATURE REVIEW

POPULATION IN BHUTAN

0.8

0.6

0.4

0.2

0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2012

Graph 1 : Population in Bhutan from 2012 to 2022 (Million)
Source: TRADINGECONOMICS.COM | World Bank

Based on Graph 1, the population in Bhutan shows an
increase from 2012 to 2020. Bhutan's population
showed a constant increase from 2012 until 2016.
Bhutan's recorded 0.7 million people in 2012 and
rose to 0.74 million people in 2016. Meanwhile, in
2017 and 2018, Bhutan's populations were the same,
which means a chart of 0.75 million people. Then, it
was increased to 0.76 million in 2019 and 0.77
million in 2020. For the years 2021 and 2022, there
are no records shown in the graph.

There are several factors influencing Bhutan's
population increase, one of which is the equitable
distribution of health facilities across the country.
Because of government improvements in the health
sector, life expectancy has risen from 66.3 in 2005
to 70.2 in 2017, resulting in an increase in the
dependent population (those aged 15 to 60), the
group of people who are economically inactive. The
literacy rate and total fertility rate have also
increased, contributing to Bhutan's population
growth.

3.0 LITERATURE REVIEW

POVERTY IN BHUTAN

The poverty headcount ratio at $5.50 per day is the
proportion of the population living on less than $5.50
per day at 2011 international prices. Poverty rates for
particular nations cannot be compared to poverty
rates given in previous editions due to modifications in
PPP exchange values.

Table 1 : Poverty rate in Bhutan in 2003, 2007, 2012 and
2017

YEAR POVERTY RATE CHANGE - Bhutan's poverty rate in 2003 was
(USD 5.50 PER (%) 73.00%.
2003
2007 DAY) - - Bhutan's poverty rate in 2007 was
2012 -15.62 61.60%, down 15.62% from 2003.
2017 73.00 -28.08
-12.19 - Bhutan's poverty rate was 44.30% in
61.60 2012, a 28.08% decrease from 2007.

44.30 - Bhutan's poverty rate in 2017 was
38.90%, a 12.19% decrease from 2012.
38.90

HAYATUL MUKMINAH BINTI OTHMAN PAGE 04
(156018)

NURUL NABILAH BINTI MUHAMAD (158098) PAGE 05

3.0 LITERATURE REVIEW

BHUTAN INEQUALITY

According to McKay (2002), inequality can be Table 2: Gini Index in Bhutan, 2012 and 2017
defines a variation in living standard across a
whole population differs with the concept of YEAR GINI INDEX
poverty which means to focus on those whose
standard of living falls below a certain threshold. 2012 0.36
The definition of inequality can take different
forms. 2017 0.38

0.4

0.3

0.2

0.1

0 2017
2012
Graph 2: Gini Coefficient Index in Bhutan, 2012 and 2017
Source: World Bank, (2018)

The definition of inequality can take different The indicators of inequality are represented
forms which the form of inequality is between by a Gini which a Gini of 0 represented
absolute differences whereas relative perfect equality and 1 is perfect inequality.
inequality is the differences in income and According to The World Bank (2018), in
between horizontal and vertical inequality. Bhutan Gini increased from 0.36 in 2012 to
Bhutan is a developing country in South Asia 0.38 in 2017. The inequality of Bhutan is likely
that faces rising inequality levels. The Gini to increased and it will become a major
coefficient is the most common measurement policy problem for the country due to
of inequality. The Gini coefficient uses the Bhutan's pace of economic development
Lorenz curve which examines the relation of picks up. Therefore, the inequality in Bhutan
the income of the country against the has received some attention in recent years.
cumulative population.

3.0 LITERATURE REVIEW PAGE 06

INEQUALITY IN BHUTAN

. TWO WAYS TO EXAMINE INEQUALITY

Inequality of outcomes

Inequality of outcome means the inequality resulting
from the economic, demographic and social process
which generates the distribution of income. the causes
of inequality outcomes is income segregations.

Inequality of opportunities

Inequality of opportunities means when a person's
chances of getting ahead, such as attaining an
education or getting a good job, it's related to socially
ascribed characteristics such as race, gender or
socioeconomics of origin.

TWO WAYS TO DETERMINE THE INEQUALITY IN
BHUTAN

Gini coefficient

The Gini coefficient by itself does not provide a
meaningful interpretation of inequality and the trend in
the rise or fall of Gini in one period is important to
determine the inequality.

Compare the consumption pattern of the
population

The top 20% consumer almost seven times more than
the bottom 20% and a person in the top 10%
consumes more time than the person in the bottom
40% of the population in Bhutan.
NURUL NABILAH BINTI MUHAMAD (158098)

PAGE 07

4.0 METHODOLOGY CHUAH KAI YING (150761)

POPULATION:POPULATION DENSITY

Population density per pixel at a resolution of Table 3: Population Density: People per Square Km from 1961 to
100m. WorldPop provides estimates of the 2021
population living in each 100x100m grid cell for
each low-income and middle-income country. YEAR Population Density:
High-resolution maps of population counts and (People per Square Km )
densities are generated along with related
metadata by integrating census, survey, satellite, 2011 18.189
and GIS datasets in a flexible machine-learning
framework. 2016 19.314

The population density is calculated by dividing 2021 20.451
the mid-year population by the square kilometers
of land. Bhutan had a population density of 20.4
people per square kilometer in 2021. Bhutan's
population density climbed from 6.8 per square
kilometer in 1972 to 20.4 in 2021, expanding at an
average yearly rate of 2.31 %. This is an increase
from the previous figure of 20.231 people per
square kilometer in 2020.

25

20

15

10

5

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Graph 3: Population Density: People per Square Km from 1961 to 2021

Source: WWW.CEICDATA.COM | World Bank

4.0 METHODOLOGY Human Development Index (HDI) uses its simple
and comprehensive formula to assess the average
POPULATION: life expectancy, education, and income of the
HUMAN population. The HDI is a summary indicator that
DEVELOPMENT assesses progress over time in three fundamental
INDEX aspects of human development, namely a long and
healthy life, access to knowledge and a decent
standard of living. A long and healthy life is
measured by life expectancy. Knowledge levels are
measured by the expected number of years of
schooling for children of school age and the
average number of years of schooling for the adult
population. Standard of living is measured by
Gross National Income (GNI) per capita adjusted
for national price levels.

Graph 4: Trends in
Bhutan’s HDI

component indices,
2005-2019

PAGE 08 CHUAH KAI YING (150761)

PAGE 09

4.0 METHODOLOGY

POVERTY IN BHUTAN

The National Statistics Bureau (NSB) creates
national poverty estimates for Bhutan based
on the Bhutan Living Standard Surveys (BLSS).
Only the most recent three BLSS rounds (from
2017, 2017, and 2003, 2007, and 2012,
respectively) should be utilized for
comparable poverty estimates. Bhutan's
national poverty line is based on the Cost of
Basic Needs method and is an absolute
poverty limit. This method calculates the price
of a meal bundle that offers a fundamentally
low level of food energy. The cost of the basic
non-food allowance is added to the food
component to determine the total poverty
line.

75% 2007 2012 2017
50%
25% Graph 5: Poverty Rate in Bhutan from 2003 to 2017
Source: World Bank
0%
2003

LIANG CHENLING (155071)

Graph 6: Poverty Headcount Ratio at National Poverty (% population)
Source: World Bank

25% 2007 2012 2017
20%
15%
10%

5%
0%

4.0 METHODOLOGY A national poverty line was calculated
using a technique that is frequently
POVERTY: employed in developing nations.
HEADCOUNT RATIO
If a household's income or consumption
YEAR POVERTY HEADCOUNT is insufficient to buy a certain amount of
RATIO AT NATIONAL products and services that are
2007 considered necessary for a minimal
2012 POVERTY standard of life, that household is said to
2017 (% POPULATION) be poor.

23.2 The measure of poverty is at the
household level. Intra - household
12.0 analysis is not possible with the data.
Every member of a home is regarded as
8.2 poor if the household is. No one in a
household who is not wealthy is poor.

LIANG CHENLING (155071) PAGE 10

4.0 METHODOLOGY Data are based on primary household
survey data that was gathered by the
INEQUALITY: governmental statistical agencies and
GINI INDEX World Bank's country departments. The
Luxembourg Income Study database
50 contains mainly the statistics for high-
income economies. The Gini index is a
40 measure of the extent to which the
distribution of income or consumption
30 expenditure between individuals or
households in an economy deviates from
20 a perfectly equal distribution. Starting with
the lowest person or household, a Lorenz
10 curve shows the cumulative percentages
of total income received versus the
0 2007 2012 2017 cumulative number of recipients. As a
2003 percentage of the largest area under the
line, the Gini index calculates the area
Graph 7: Gini Coefficient (Gini Index) of Bhutan , 2003-2017 between the Lorenz curve and a
hypothetical line of absolute equality.
Source: WWW.CEICDATA.COM | World Bank Since perfect equality is represented by a
Gini index of 0, perfect inequality is
YEAR GINI COEFFICIENT implied by a Gini index of 100. Recently,
(INDEX POINTS) Bhutan's inequality has drawn some
attention. The trend of the Gini's rise or fall
through time is important.

2003 40.90 Bhutan's average value was 38.8 index
2007 38.10 points during that period. Despite
2012 38.80 significant recent fluctuations, Bhutan's
Gini index generally decreased from 2003
(40.9 index points) to 2017 (37.4 index
points).

2017 37.40

CHUAH KAI YING (150761) PAGE 11

5.0 DISCUSSION

POPULATION

Graph 8: Bhutan Population, 1950-2020 PAGE 12

Bhutan's population is equivalent to 0.01% of the total
world population. Bhutan ranks number 165 in the list of
countries by population.The median age in Bhutan is 28.1
years. The population density in Bhutan is 20 per KM² it
is 52 people per mi². While the total land area is 14,717
sq. miles. s. The main cities by population in Bhutan are
Thimphu (98,676 people), Punakha (21,500 people),
Tsirang (18,667 people) and Phuentsholing (17,043
people)..Based on the Bhutan population from the year
1950 to 2020 were increasing. In the year 1950, the
Bhutan population was 176,797 people and in 2020 it is
771,608 people. It increased to 594,811 people (77.09%).

CHUA SWEE SIONG (156286)

5.0 DISCUSSION

POPULATION

Graph 9: Infant and under age 5 mortality rate in Bhutan, 1950-2020 PAGE 13

The infant mortality in Bhutan is 19.6
per 1000 live births and the deaths
under age 5 is 24.2 per 1000 live births.
While for the deaths under 5 in 1950
was 360.44 per 1000 live births and
the infant mortality was 246.27 per

1000 live births it decreased
continuously until year 2020. The
deaths under 5 in 2020 was 24.16 per
1000 live births and the infant mortality

19.58 per 1000 live births.

CHUA SWEE SIONG (156286)

5.0 DISCUSSION

POVERTY

Graph 10: Poverty Headcount index (%) Page 14

According to the country's
statistics, the poverty rate in
Bhutan has declined, from 12% in
2012 to 8.2% in 2017, bringing
great benefits. From 2004 to
2012, the country's poverty rate
fell by 19.7%, and over the past 13
years, the poverty rate has fallen
by 23.5%, with an average annual
decline of 1.8%. The proportion of
people living in extreme poverty
also fell sharply, from 5.9% in
2007 to 2.8% in 2012 and 1.6% in
2017.

CHONG WEN JIN (156153)

5.0 DISCUSSION

INEQUALITY

Graph 11: Share of Total (%) Inequality in Bhutan has
been increasing in recent
Graph 12: Bottom 50% Net Personal years. The income share
Wealth Share of Bhutan, 2016-2021 of the richest is rising,
with the richest 20%
earning almost 9 times
as much as the poorest
20% in 2007, falling to 8
times in 2012, then rising
again to just over 8 in
2017. Inequality among
the top earners has been
declining, and the
proportion of the wealthy
has been declining in
recent years, while the
proportion of the low-
income group has also
declined, but it is far less
than the proportion of
the wealthy. This means
that inequalities among
low-income groups are
always evident.

CHONG WEN JIN (156153) Page 15

5.0 DISCUSSION

INEQUALITY

Among the various districts in Bhutan, Bumthang, Chhukha, Haa, Monggar,
Punakha, Sarpang, Trashigang and Zhemgang saw a decrease in inequality
between 2007-2012 and an increase in inequality between 2012-2017. (Tobden,
T., 2019) In general, although there is a social welfare system that reduces
inequality in Bhutan, the effect is not obvious. Inequality still exists in Bhutan,
and the inequality among the poor is more obvious. The employment
opportunities and living conditions of the poor still need to be greatly
improved. Inequalities also persist between regions.

Figure 3:Regional inequality PAGE 16
distribution map

HU SANAN (155125)

Conclusion PAGE 17

Over the decades, Bhutan had became a
successful development story by reducing
the poverty rate and improving HDI. While
the major challenges such as demographic
changes, unequal distribution of resources
and poverty hit the nation, the Royal
Government of Bhutan attempted to
control the fertility rate, Gini coefficient
and also HDI. By implementing
methodologies, for instance, popular
density and Gini Index, the macro-data of
Bhutan could be collected and interpreted
in depth for investigation. Furthermore, the
life expectancy in Bhutan is estimated at
72.77 years while the highest population
city is Thimphu with 98,676 people
recorded. Bhutan was recorded as the
fastest poverty reduction nation in South
Asia in 1990. On the other side, Bhutan
implements the welfare system, the Kidu
system with aid such as scholarships and
reformations of lands to the poorest.
Hence, most of the districts performed a
decrease in inequality from 2007 to 2012.
The Kingdom of Bhutan is confident about
the nation will record a better performance
from all perspectives despite external
threats such as supply chain disruptions,
global crises and rising inflation.

KAM WEN JING (151556)

REFERENCES

Bhutan - GINI index - 2022 data 2023 Razzaque, M. A. (2020, May). Graduation of

forecast 2003-2017 historical. (n.d.). Bhutan from the group of least developed

TRADING ECONOMICS | 20 million countries: Potential implications and

INDICATORS FROM 196 COUNTRIES. policy imperatives. United Nations

https://tradingeconomics.com/bhutan/gini Economic and Social Commission for Asia

-index-wb-data.html and the Pacific. Retrieved from

Bhutan BT: Population density: People per https://www.unescap.org/sites/default/d8f
Square km. (2022). Global Economic Data,
Indicators, Charts & Forecasts | CEIC. iles/knowledge-
https://www.ceicdata.com/en/bhutan/pop
ulation-and-urbanization-statistics/bt- products/WP_20_04%20Bhutan%20Graduat
population-density-people-per-square-
km ion_Potential%20implications%20and%20p

olicy%20imparatives.pdf

Royal Government of Bhutan. (2016,

December). Economic Development Policy

Human development report 2020 - Bhutan Royal Government of Bhutan December

- Friends of Bhutan association, Austria. 2016. Ministry of Economic Affairs.

(2021). Friends of Bhutan Association, Retrieved from

Austria. https://austria- https://www.moea.gov.bt/wp-

bhutan.org/en/about-bhutan/human- content/uploads/2017/07/Economic-

development-report-2020-bhutan/ Development-Policy-2016.pdf

Maria Emma Santos, K. U. (n.d). The World Bank. (2022). GDP per capita
Multidimensional Poverty in Bhutan:
Estimates and Policy Applications . (current US$) - Bhutan | Data. World Bank
Journal of Bhutan Studies, 2-7. Retrived
from Data. Retrieved from
https://sg.docworkspace.com/d/sACWe8b
el4aNMv7ipsK2nFA https://data.worldbank.org/indicator/NY.G

DP.PCAP.CD?locations=BT

Tobden, T. Estimating the trends in

inequality in Bhutan using the recent

MacroTrends. Bhutan Poverty Rate 2003- Living Standard Survey 2017: The

2022. Retrieved from importance of adjusting expenditure for

https://www.macrotrends.net/countries/B household composition. Asia Pac Policy

TN/bhutan/poverty-rate Stud. 2019; 6: 381– 396.

https://doi.org/10.1002/app5.285

National Statistics Bureau - BLSS Tourism Council of Bhutan. (2022).
Analytical Brief No 1 - Poverty and
Inequality in Bhutan (26 February 2004) Geography & Geology. Tourism Council of
https://catalog.ihsn.org/index.php/catalog
/23/download/28290 Bhutan. Retrieved from

https://www.bhutan.travel/page/geography

-geology

Population Perspective Plan, Bhutan Trading Economics. Bhutan Population.
(2010). Goals and Strategies. Research
and Evaluation Division, Gross National Retrieved from
Happiness Commission, Royal Government
of Bhutan. Retrieved from https://tradingeconomics.com/bhutan/pop
https://sg.docworkspace.com/d/sAEVxTwu
l4aNM3LCpsK2nFA ulation

Ugyel, L. (n.d). Inequality in Bhutan:

Addressing Its Through The Traditional

Poverty and Equity Brief - South Asia - Kidu System . Journal of Bhutan Studies ,

Bhutan (April 2021) 2-9. Retrieved from

https://databank.worldbank.org/data/dow https://www.bhutanstudies.org.bt/publicat

nload/poverty/987B9C90-CB9F-4D93- ionFiles/JBS/JBS%2039/5-24.pdf

AE8C-

750588BF00QA/AM2020/Global_POVEQ_B

TN.pdf

ALL MEMBERS PAGE 18

CONTRIBUTION OF
MEMBER

NAME TASK
CHONG WEN JIN
CHUA SWEE SIONG Discussion
CHUAH KAI YING Final checking
HAYATUL MUKMINAH BINTI
Discussion
OTHMAN Final checking
HU SANAN
Methodology
KAM WEN JING Final checking

LIANG CHENLING Literature review
NURUL NABILAH BINTI Final checking

MUHAMAD Abstract
Discussion
ALL MEMBERS Final checking

Introduction
Conclusion
Final checking

Methodology
Final checking

Literature review
Final checking

PAGE 19

THANK YOU