An Assessment of Outcomes and Objectives of Bhutan Foreign Direct Investment Policy 2019

Abstract

Foreign Direct Investment plays a crucial role in economic development. Therefore, assessing Foreign Direct Investment policy effectiveness is essential to understand its impact on growth. This study assesses whether Bhutan’s Foreign Direct Investment Policy 2019 achieved its six Gross National Happiness (GNH)-aligned objectives. Employing an explanatory sequential mixed-methods design, data were collected from seventy stakeholders including foreign investors, local partners, Invest Bhutan officials, and potential investors through a structured questionnaire incorporating both Likert-scale and open-ended items. Quantitative data were analyzed using descriptive statistics, while qualitative responses underwent thematic analysis. Findings reveal a policy of partial effectiveness. It successfully attracted investment in green energy and strengthened Brand Bhutan, with majority stakeholder agreement on both the objectives. However, the policy demonstrated critical shortfalls in promoting culturally and spiritually sensitive industries and fostering a knowledge society through technology transfer. The study identifies an implementation gap—the policy creates a permissive environment but lacks orchestration mechanisms to channel investment toward its most ambitious objectives. Recommendations include mandatory environmental, social and governance reporting; targeted promotion of Gross National Happiness-aligned investment niches; mandated knowledge transfer partnerships; and enhanced institutional capacity.

This research provides empirical assessment of Bhutan's values- driven Foreign Direct Investment policy, offering actionable insights for small economies seeking to align foreign investment with holistic development philosophies.