Before 1960, the Himalayan mountain Kingdom of Bhutan had no contact with the world. Isolationism was a policy of choice.

However, squeezed between two regional superpowers, China and India, it was vulnerable to a takeover; so in 1971 the kingdom joined the UN. That didn’t mean that Bhutan's enlightened Eton-educated king was about to see his country embrace the 20th century pattern of development that puts material wealth before all.

In the succeeding decades, Bhutan has certainly opened up. But in this edition of Earth Report, we find that it has done so largely on its own terms.

Bhutan Life

In Bhutan four out of five people still live in villages. To maintain their vitality and culture, the national policy discourages urban migration. Rather than being guided by the GNP - or Gross National Product - as a measurement of progress, the government is developing indicators based on 'Gross National Happiness'.

Rural living is thought to be one road to increasing quality of life. To reinforce the policy of keeping people on the land, the authorities have banned the sale of land less than five hectares. Laws dictate that land holding per family should not exceed 25 acres, or 10 hectares.

Naturally, spirituality is a major issue in the search for happiness. Buddhist thinking does not distinguish individuals from other beings. It puts a lot of stress on interdependence – part of a range of life across species and generations. Karma Ura, director of the Centre for Bhutan Studies, points out that one person can be many things, from a farmer and a textile manufacturer, to a painter and dancer.

In this way, there is value in having a diversity of local skills and a barter system of exchange still fulfils most of the villagers needs. Of course, there is always a balance between work and leisure.

Karma Ura explains: "Walking and working hard in this country is a way of building you up as a characteristic mountain people. You must distinguish between hard work at certain times of year, and the leisure that is produced for 2-3 months of the year, when you enjoy socialisation, cultural life, life of community. In urban life you work all the time."

A sense of responsibility pervades village life as well, further encouraging young people to stay instead of heading off to the city. Many young people feel very connected to working within their communities and know that they will be the next generation to look after things.

City Dreams

Although there seems to be a deep rooted sense of connection to rural life, there are still factors drawing people to cities. Beneath the image of a rural utopia, the young have been leaving the land to seek city jobs and be part of a glamorised modern world. Televisions and cars are flashy attractions. Cities such as London and New York are dream places to many of Bhutan's youth.

This migration is shrinking the agricultural labour force. In some families, only the parents stay behind in the village. Some go off to work to financially support other family members.

A major reason why so many Bhutanese want to live in town has been the urban bias in the modern education curriculum. Skills training often did not correspond to local work but instead emphasised urban jobs, such as office work. At one time Indians dominated jobs in Bhutan; now many have been replaced by Bhutanese.

A farmer describes the effect education can have on one's attitude: "Those who have been educated want to live in town because they understand city life. I wasn’t educated so want to live in the village. I don’t want to go to town; I love village life."

Hope for the Countryside

There is an educational system that doesn't groom students for an urban life. All along, monasteries have been providing not only spiritual tutoring, but an alternative to the modern workforce. But as one monk explains, "Only those from poor families who can’t afford modern education send their kids to be monks."

Many urban people are now increasingly questioning the benefits of leaving the land. Some find the cities too noisy; others are uncomfortable with the power of television on youth.

It can also be a case of difference in the cost of living. One man says: "If you go to the city, even if you earn a lot of money, it is so expensive. If you stay in the village, help each other, and earn a little extra cash selling agricultural products, that money is bigger than money earned in the city. So it is better to stay in the village and help one another, and do productive work."

To ensure a healthy balance between rural and urban culture, the government has taken steps to keep its young people living on the land. Health, energy and education facilities are being provided to rural areas. While most governments channel their energy to cities and industry, Bhutan’s plentiful hydroelectric power is taken to the remotest villages. Health centres and hospitals have been distributed to Bhutan’s largely rural population of 750,000.

The policy has been to alter the school curriculum to promote the status of farmers and keep students in touch with agricultural practices. More traditional subjects, such as farming and crafts, are taught alongside the other more formal subjects. "Besides the modern education, in school my child has agriculture and farming lessons. We also teach him farming at home, like how to take care of cattle so if he doesn’t get a job he will understand our work enough to survive," says a farmer.

Democratic Shift

While the rest of the world favours centralising power, Bhutan is experimenting with decentralising decision-making to the rural areas. According to Karma Ura, this moves executive power closer to the individual.

The national assembly of Bhutan passed a local government act in 2000, making it easier for rural areas to have greater influence on their own affairs. It is no longer a case of a king making choices on behalf of his people.

The government is also trying to boost the rural economy by making loans and research available to communities to expand food production and small scale industries. If people can't earn enough money through farming there is the option to get a government loan to start a village business. It is a bold attempt to make rural life just as attractive as urban life.

To give villagers access to markets, roads to remote villages are being built. However, transport links can be a double-edged sword. Although farmers have an easier time carrying their loads into town, cheap imports can often come back the other way.

The government is giving loans to boost rural economies but farmers complain that they can’t compete with cheap imports like butter, rice noodles, biscuits and sweets from India. It seems though that the battle between local and imported goods is one the King of Bhutan is willing to take on. According to the Foreign Minister, Bhutan exports a variety of juices and jams and a push is on to increase the service, industrial and manufacturing sectors.

The WTO Debate

Bhutan is at a cross roads. Does it protect its small businesses or further open its economy to cheap imports and foreign investment by joining the World Trade Organisation?

The Foreign Minister is all too aware of potential conflicts from communities protesting inequitable dealings. He explains, "On the one hand there are risks of joining the organisation, but of not joining also there are probably even greater risks of us being completely marginalised in a fast liberalising and globalising world."

Once a member, Bhutan’s laws must conform to the organisation’s rules of liberalised trade and investment or bear sanctions against its fledgling export industries. If it chooses to remain outside the WTO, it would be free to protect its economy from giant foreign multinationals and cheap imports.

Re-measuring Progress

Bhutan is facing a dilemma just as great as four decades ago when it opened up to the world. Does it join the World Trade Organisation and its contentious free trade agenda, or choose to protect its own distinctive culture? There’s powerful evidence that Bhutan will continue to follow its own path.

A recent step in this direction was a conference to discuss the concept of Gross National Happiness. The crown prince of Bhutan addressed an international conference of thinkers to debate this issue.

The Foreign Minister says: "To us [in] maintaining our gross national happiness it is very important that we do not unsettle our population. All our development is people centred and therefore we do programmes that ensure the wellbeing of the people, and the wellbeing includes spiritual as well as material contentment."

Balancing economic development with the contentment of an entire nation is an impressive task. Although the measurement of wellbeing will vary greatly by culture and region, simply acknowledging its value and incorporating it into national economic planning creates a different approach to governance. Bhutan has certainly taken its first steps along a new path.