Publication:
Bhutan - Hydropower Export Boom : Its Macroeconomic Impacts and Policy Implications

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dc.contributor.authorWorld Bank
dc.date.accessioned2013-08-28T21:33:52Z
dc.date.available2013-08-28T21:33:52Z
dc.date.issued2002-09
dc.description.abstractBhutan has shown remarkable economic performance over the last two decades. Growth during the second half of the 1990s was particularly strong, with annual Gross Domestic Product (GDP) growth averaging 6.5 percent. A large part of this performance has been supported by generous inflows of foreign aid and buoyant electricity exports to India, which have spurred growth both directly by expanding export earnings and indirectly by stimulating investment in the construction and transport industries. Growth prospects for Bhutan look bright, supported by enormous hydropower generation potential. In particular, the scheduled commissioning of the Tala hydropower project in 2005/06 is expected to give a major boost to growth by tripling the country's power generation capacity. While the expansion in power exports has brought significant benefits to Bhutan, there has been concern that it may not be an 'unmitigated blessing.' Despite large net inflows of foreign capital, Bhutan's macroeconomic indicators suggest that inflation has so far been modest and under control. The results of the empirical analysis of the Bhutanese economy indeed confirm that the power exports to India as well as financial assistance have caused real appreciation of the ngultrum against the rupee over time, through increased private spending and short-term monetary disequilibrium. Despite the real appreciation, however, the study finds little evidence to suggest contraction or stagnation of the non-power tradable sector. While the performance of the tradable sector may have been stronger in the absence of the real appreciation, thus far there is no sign of the Dutch disease, or the Dutch condition, in the Bhutanese economy. This paper examines empirically the macroeconomic impacts of Bhutan's increased power exports to India. It is the first serious attempt to address the presence of the Dutch disease in the Bhutanese economy. Previous attempts had been hampered by lack of sufficiently long time series data. Four sets of key questions are addressed in this study: (i) what are the features of the power export boom in Bhutan? Is it a temporary or permanent phenomenon? How large are power exports? (ii) Have power exports appreciated the real value of the ngultrum? If so, would further increase in power exports put further upward pressure on the ngultrum? (iii) What have the impacts on the tradable sector been? Are there Dutch-disease symptoms? (iv) Are these impacts sizable enough to require policy interventions? If so, what kind of policy options is then available to the Government?en
dc.identifierhttp://documents.worldbank.org/curated/en/2002/09/16321765/bhutan-hydropower-export-boom-macroeconomic-impacts-policy-implications
dc.identifier.doi10.1596/15474
dc.identifier.urihttps://hdl.handle.net/10986/15474
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO MARKETS
dc.subjectADVERSE EFFECTS
dc.subjectAGENCY RISK
dc.subjectAGRICULTURAL LAND
dc.subjectAGRICULTURE
dc.subjectAIR QUALITY
dc.subjectALCOHOL ABUSE
dc.subjectBALANCE OF PAYMENTS
dc.subjectBANK LENDING
dc.subjectBIODIVERSITY
dc.subjectBUSINESS OPPORTUNITIES
dc.subjectCAPITAL ACCOUNTS
dc.subjectCARBON
dc.subjectCARBON DIOXIDE
dc.subjectCLEAN WATER
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMODITIES
dc.subjectCOMMODITY
dc.subjectCOMMODITY PRICE
dc.subjectCOMMODITY PRICES
dc.subjectCOMPETITIVE INVESTMENT
dc.subjectCOMPETITIVENESS
dc.subjectCOMPREHENSIVE STRATEGY
dc.subjectCORPORATE SOCIAL RESPONSIBILITY
dc.subjectCURRENCY
dc.subjectDEBT
dc.subjectDEMOGRAPHIC
dc.subjectDEVELOPMENT PROJECTS
dc.subjectDEVELOPMENT STRATEGIES
dc.subjectDEVELOPMENT STRATEGY
dc.subjectDISEASES
dc.subjectDISPOSABLE INCOME
dc.subjectDISSEMINATION
dc.subjectDISTRIBUTIONAL EFFECTS
dc.subjectDIVIDENDS
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC IMPLICATIONS
dc.subjectECONOMIC OVERHEATING
dc.subjectECONOMIC SECTORS
dc.subjectECONOMIC VALUE
dc.subjectEDUCATED WOMEN
dc.subjectELDERLY
dc.subjectELECTRICITY GENERATION
dc.subjectEMPLOYMENT OPPORTUNITIES
dc.subjectENDANGERED SPECIES
dc.subjectENVIRONMENTAL
dc.subjectENVIRONMENTAL CONSERVATION
dc.subjectENVIRONMENTAL COSTS
dc.subjectENVIRONMENTAL DAMAGE
dc.subjectENVIRONMENTAL EDUCATION
dc.subjectENVIRONMENTAL IMPACT
dc.subjectENVIRONMENTAL IMPLICATIONS
dc.subjectENVIRONMENTAL REGULATIONS
dc.subjectENVIRONMENTAL RISKS
dc.subjectENVIRONMENTAL SUSTAINABILITY
dc.subjectETHNIC GROUPS
dc.subjectEXCHANGE RATE
dc.subjectEXPENDITURES
dc.subjectEXPLOITATION
dc.subjectEXPORT SECTOR
dc.subjectEXPORTS
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL MANAGEMENT
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL SECTORS
dc.subjectFINANCIAL SYSTEM
dc.subjectFISCAL POLICY
dc.subjectFISH
dc.subjectFISHING
dc.subjectFOOD SECURITY
dc.subjectFOREIGN DIRECT INVESTMENT
dc.subjectFOREST COVER
dc.subjectFUTURE GROWTH
dc.subjectGDP
dc.subjectGOOD GOVERNANCE
dc.subjectGOVERNMENT AGENCIES
dc.subjectGROSS DOMESTIC PRODUCT
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectHEALTH RISKS
dc.subjectHEAVY METALS
dc.subjectHUMAN CAPITAL
dc.subjectIFS
dc.subjectINCOMES
dc.subjectINDUSTRIAL DEVELOPMENT
dc.subjectINDUSTRIALIZATION
dc.subjectINEQUALITY
dc.subjectINFORMATION SYSTEM
dc.subjectINSTITUTIONAL CAPACITY
dc.subjectINTANGIBLE
dc.subjectINTERNATIONAL ACCOUNTING STANDARDS
dc.subjectINTERNATIONAL POVERTY LINE
dc.subjectINVESTMENT CLIMATE
dc.subjectLABOR PRODUCTIVITY
dc.subjectLARGE-SCALE INVESTMENTS
dc.subjectLEGAL FRAMEWORK
dc.subjectLOCAL COMMUNITIES
dc.subjectLOCAL DEVELOPMENT
dc.subjectLOCAL GOVERNMENTS
dc.subjectLOCAL POPULATION
dc.subjectLOSS OF LAND
dc.subjectLOW-INCOME COUNTRIES
dc.subjectLOW-INCOME COUNTRY
dc.subjectMACROECONOMIC STABILITY
dc.subjectMALARIA
dc.subjectMALNUTRITION
dc.subjectMALNUTRITION AMONG CHILDREN
dc.subjectMANDATES
dc.subjectMARKET PRICE
dc.subjectMEAT
dc.subjectMETALS
dc.subjectMIDDLE-INCOME COUNTRY
dc.subjectMIGRATION
dc.subjectMILLENNIUM DEVELOPMENT GOALS
dc.subjectMINES
dc.subjectMINISTRY OF EDUCATION
dc.subjectMINISTRY OF HEALTH
dc.subjectNATIONAL BORDERS
dc.subjectNATIONAL DEVELOPMENT
dc.subjectNATIONAL GOVERNMENT
dc.subjectNATIONAL INCOME
dc.subjectNATIONAL LEVEL
dc.subjectNATIONAL LEVELS
dc.subjectNATIONAL POLICY
dc.subjectNATIONAL POVERTY
dc.subjectNATIONAL POVERTY LINE
dc.subjectNATIONAL PROJECT
dc.subjectNATURAL CAPITAL
dc.subjectNATURAL RESOURCE
dc.subjectNATURAL RESOURCE BASE
dc.subjectNATURAL RESOURCE MANAGEMENT
dc.subjectNATURAL RESOURCES
dc.subjectNEW PRODUCTS
dc.subjectNUTRITION
dc.subjectOPPORTUNITY COSTS
dc.subjectPER CAPITA INCOME
dc.subjectPOLICY DIALOGUE
dc.subjectPOLICY ENVIRONMENT
dc.subjectPOLICY FRAMEWORK
dc.subjectPOOR
dc.subjectPOOR PEOPLE
dc.subjectPOPULATION DENSITY
dc.subjectPORTFOLIO
dc.subjectPOSITIVE EFFECTS
dc.subjectPOTENTIAL INVESTORS
dc.subjectPOVERTY ERADICATION
dc.subjectPOVERTY INCIDENCE
dc.subjectPOVERTY LINE
dc.subjectPOVERTY RATES
dc.subjectPOVERTY REDUCTION
dc.subjectPRESENT VALUE
dc.subjectPRIVATE ENTITIES
dc.subjectPRIVATE INVESTMENT
dc.subjectPROGRESS
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC PARTICIPATION
dc.subjectRAPID GROWTH
dc.subjectREAL GDP
dc.subjectREAL GROWTH RATE
dc.subjectREAL WAGES
dc.subjectREGULATORY FRAMEWORK
dc.subjectREGULATORY REGIME
dc.subjectREINVESTMENT
dc.subjectREMOTE AREAS
dc.subjectREMOTE RURAL AREAS
dc.subjectREPATRIATION
dc.subjectREPUTATION
dc.subjectRESOURCE MANAGEMENT
dc.subjectRESOURCE USE
dc.subjectRESPECT
dc.subjectRESPONSIBLE INVESTORS
dc.subjectRISK EXPOSURE
dc.subjectRURAL
dc.subjectRURAL AREAS
dc.subjectRURAL ELECTRIFICATION
dc.subjectRURAL POPULATION
dc.subjectRURAL ROADS
dc.subjectSANITATION
dc.subjectSAVINGS
dc.subjectSECURITY CONCERNS
dc.subjectSOCIAL CAPITAL
dc.subjectSOCIAL CHANGES
dc.subjectSOCIAL CONSEQUENCES
dc.subjectSOCIAL COSTS
dc.subjectSOCIAL IMPACT
dc.subjectSOCIAL INFRASTRUCTURE
dc.subjectSOCIAL RISKS
dc.subjectSOCIAL STANDARDS
dc.subjectSOCIAL TENSIONS
dc.subjectSOCIOECONOMIC DEVELOPMENT
dc.subjectSTATE BANKS
dc.subjectSTATE ENTERPRISE
dc.subjectSTRONG GOVERNANCE
dc.subjectSUSTAINABLE DEVELOPMENT
dc.subjectSUSTAINABLE ECONOMIC GROWTH
dc.subjectSUSTAINABLE GROWTH
dc.subjectSUSTAINABLE USE
dc.subjectTAX
dc.subjectTAX RATE
dc.subjectTAX REVENUES
dc.subjectTAXATION
dc.subjectTECHNICAL ASSISTANCE
dc.subjectTECHNICAL CAPACITY
dc.subjectTIMBER
dc.subjectTRAINING OPPORTUNITIES
dc.subjectTRANSACTION COSTS
dc.subjectTRANSPARENCY
dc.subjectTRANSPORTATION
dc.subjectURBAN CENTERS
dc.subjectVALUE ADDED
dc.subjectVOLATILITY
dc.subjectWATER RESOURCES
dc.subjectWEALTH
dc.subjectWEALTH CREATION
dc.subjectWORLD DEVELOPMENT INDICATORS
dc.subjectWORLD TRADE
dc.subjectWORLD TRADE ORGANIZATION
dc.subjectWTO
dc.subjectYOUNG MEN
dc.titleBhutan - Hydropower Export Boom : Its Macroeconomic Impacts and Policy Implicationsen
dspace.entity.typePublication
okr.date.disclosure2012-06-04
okr.date.doiregistration2025-05-07T11:38:45.057547Z
okr.doctypeEconomic & Sector Work::Policy Note
okr.doctypeEconomic & Sector Work
okr.docurlhttp://documents.worldbank.org/curated/en/2002/09/16321765/bhutan-hydropower-export-boom-macroeconomic-impacts-policy-implications
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticePoverty
okr.globalpracticeEnvironment and Natural Resources
okr.globalpracticeTrade and Competitiveness
okr.globalpracticeHealth, Nutrition, and Population
okr.guid559751468006940257
okr.identifier.externaldocumentum000386194_20120604013552
okr.identifier.internaldocumentum16321765
okr.identifier.report69498
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/06/04/000386194_20120604013552/Rendered/PDF/694980ESW0P07700PUBLIC00Box0369278B.pdfen
okr.region.administrativeSouth Asia
okr.region.countryBhutan
okr.sectorIndustry and trade :: Other domestic and international trade
okr.themeTrade and integration :: Other trade and integration
okr.topicHealth, Nutrition and Population::Population Policies
okr.topicEconomic Theory and Research
okr.topicPrivate Sector Development::Emerging Markets
okr.topicPoverty Reduction::Rural Poverty Reduction
okr.topicEnvironmental Economics and Policies
okr.topicMacroeconomics and Economic Growth
okr.topicEnvironment
okr.unitEcon. Policy & Poverty Sector (SASEP)
okr.volume1 of 1
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