Public And Private Economies

The economic system at all the degree, whether it is developed or developing economic system, it is divided into two parts, private and public sector. Private sector economic system is owned and operated by an single enterpriser whereas public sector economic system is under control of authorities and operated by authorities.

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Public sector of an economic system exists in Bhutanese economic system before the private sector development. The denationalization or private sector development has ne’er been long clip back since the state had a policy of isolation boulder clay 1961. It was merely agribusiness sector in private in 1960s and later it was accompanied by some trading activities. And with addition in demand in the market, many more private sectors have developed. The private sector have developed at really fast rate and played an of import function in economic development by lending big portion to the gross domestic merchandise ( GDP ) and using big figure of people. The public sector every bit made a important function in economic development.

The gross domestic merchandise, literacy rate, balance of payment ( BoP ) and poverty rate are some of import indexs of economic system. The advancement of the economic development to the full depends upon these indexs. Private sector contributes immense sum to the GDP and employs a 63 % of Bhutanese population by it. Similarly, immense portion of GDP is contributed by public sector but merely 10 % of the population is employed in this sector.

The geographical characteristics, developing substructure, deficiency of skilled work force, and fiscal job are the chief trouble factors faced by both the sectors to develop. The creative activity of employment, coevals of gross to the authorities is the most critical function played by the private sector. Capital formation, keeping regional balance development and to cut down poorness rate are roles played the public sector.

In decision, both the sectors are every bit of import for the advancement of economic activity.


The Private sector is the portion of economic system owned and operated by an person for their ain personal benefit without intervention of the authorities. The private sector is defines as “ the portion of the economic system of a state that is non under the direct control of the authorities ” ( Oxford Advanced Learner ‘s Dictionary, 1948, P.1207 ) . And Clayton ( 2001, P.256 ) defines private sector as “ the portion of the economic system made up of private persons and in private owned concern ” . The public sector is the portion of an economic system owned by society and operated to deduce a benefit for the whole society with the aid of authorities at all degree of an economic system. Oxford Advanced Learner ‘s Dictionary ( 1948, P.1227 ) states the public sector as “ the portion of the economic system of a state that is owned or controlled by the authorities ” . But Lisey, Purvis & A ; Steiner ( 1985, p. 34 ) states “ public sector refers to all production that is in public custodies ” .

This assignment analysis what function does the private sector and the public drama in economic development of modern Bhutan, hence, a brief history of public and private sector, index of an economic development of Bhutan, part to GDP from both the sectors, employment chances provided and troubles in development of public and private sector.

History of Private and Public Sector

The development of private sector in Bhutan day of the month back prior to origin of five twelvemonth program in 1961s and even before that epoch, there exist the private sector in the Bhutanese economic system. Since the day of the month from the gap up the economic system in the 1961s, after the origin of the of five twelvemonth program, the lone private sector exist was in the agribusiness accompanied by some trading activities in the economic system. Since so, as clip get passed, the demand exceed the supply in economic system the more private sector such as hydro-power, wood industries, touristry and many more of import industries have supplemented agribusiness sector subsequently to run into the demand. By the terminal of the twelvemonth 2000, the authorities had issued over 9000 industrial licences, 12000 trading licences and 124 companies ( Bhutan Private Sector Survey ) . Harmonizing to the Statistical Yearbook of Bhutan ( 2009 ) claims royal authorities made strong committedness to private sector development and denationalization in the late eightiess. Therefore the denationalization began in the 6FYP period ( 1987-1992 ) since it is the engine to the growing of an economic system ( Royal Monetary Authority of Bhutan ) . The public sector had existed even before the being of private sector because most of the private sector was owned as public sector by the authorities. For an illustration, Wangchuk ( 2010 ) states touristry sector was established in 1974 as public sector but latter in twelvemonth 1991 it was handed over private sectors.

Economic Indicator of Bhutan

Some of the economic indexs that measure the economic system advancement of Bhutan are mentioned as below ;

Gross Domestic Product ( GDP ) per capita ;

GDP per capita is the entire value of concluding goods and services within the state divided the entire population. Real GDP of Bhutan accelerated to 6.7 per centum in 2009 which the public presentation of the economic system during the twelvemonth was progressive but growing rate is below the predating 5-years ( 7 per centum ) since 2003. Bhutan ‘s per capita income/ GDP was recorded USD 1,827 which is highest in South-Asian states and unemployment rate had addition from 3.7 per centum to 4 per centum in 2009 as compared to old twelvemonth ( Royal Monetary Authority of Bhutan ) . The growing rate had accelerated and state ‘s per capita income is highest in the South-East Asia but there is high public debt. This is because Bhutan had undergone a monolithic Reconstruction of the houses which was destroyed by temblor of 21st September 2009 and immense sum is invested in Puna-Tsangchhu hydro-power undertaking through public adoption.

Literacy Rate ;

Literacy rate is one of the imperative indexs of the economic development. The higher literacy rate indicates better economic development. Royal Monetary Authority of Bhutan provinces, “ aˆ¦ unemployment has risen to 4 per centum ( 2009 ) from 3.7 last twelvemonth ” . The statement shows the literacy rate had shoot up within short span of clip after debut of modern instruction and there are more people with better making.

Balance of Payment ;

Positive balance of payment shows better economic development since it shows more inflow of capital, more export than the import and better competition in the international market. Bhutan ‘s balance of payment shows positive because the negative balance of payment is finance through foreign AIDSs.

Poverty Rate ;

Lower the rates of the poorness, better the economic advancement and versa-vice. To cut down poorness rate from 23 % to 15 % is the chief object of the 10th five twelvemonth program and is an of import index that indicates the Bhutanese economic system at the present times is come oning good

Contribution of Public and Private sector to GDP of Bhutan

The part from the machinery and equipment to the GDP has fluctuated every twelvemonth but the private sector history more than public sector since twelvemonth 2000 boulder clay 2009 in machinery and equipment. In building side, there is little lessening in the sum contributed to national income in 2005 to 2006 and hereafter there is a uninterrupted addition in the part sector. The private sector shows uninterrupted addition in tendency from twelvemonth 2006 but fluctuation still occurs in public sector in building sector. Therefore it signifies the authorities gives precedence to denationalization instead than public plants in the building side. Similarly the value added from gross fixed capital formation has increased since from a twelvemonth 2000 boulder clay 2009, therefore bespeaking good advancement in the development activities.

Employment Contribution from both the sectors

In the private sector, agribusiness being the anchor of the economic system is emerging as an of import sector bring forthing the great chances for employment and it provides employment to around 65.2 % in 2007 of labour force. Further it say ‘s the substructure has quickly developed since 1960s onward and building sector has employed more than 35,000 people ( hypertext transfer protocol: // ) .

From the above tabular array it is clearly shows the maximal employment is generated by the agribusiness sector. This indicates the state is still on dependant to agribusiness sector. On the other manus a part from the agribusiness sector to GDP has lessening. Therefore, we can do out the state is still in the phase of crude manner of farming without utilizing modern engineering. And the following to agriculture sector is private concern sector where it gives employment to 66,000 people. Government, Public Corporation, Private Corporation, Armed force and NGO/INGO employs 49900, 10500, 8500, 4900 and 1000 severally.

Penjor ( 2011 ) states that 63 % of Bhutanese population is employed in private sector followed by the authorities with 24 % , 10 % in public sector and 3 % in non-governmental Organization.

Troubles in the Development of Private and Public Sector in Bhutan

Geographic characteristic ;

Geographic characteristic such as soft incline, rugged terrain and clime status in some topographic point have played a critical function in the developing the private sector. Most of the topographic point in Bhutan have incline of more than 30 grade which requires immense sum for the building roads, H2O supply, power supply, which leads for the failure to put up the private and public sector development.

Underdeveloped Infrastructure and deficiency of skilled people ;

The deficiency of substructure and skilled work force had been major factor that makes troubles in developing the private and public sectors and it force both the sectors to be technically backward and decelerate in the advancement of the development activities.

Fiscal Problem ;

Fiscal Institutions in Bhutan are non in place to impart an sum that is required by the enterprisers to develop a private and public sector and to buy modern and productive engineering which is really much required. Therefore, authorities and enterprisers are force to impart loans from other states and that increases the public debt of the state.

Lack of competition ;

Bhutanese economic system lacks the competition in domestic as good in the international market. It is merely hydro-power undertaking that compete in the international market and generates gross for the state. In some instance, the market operates with monopoly power and enjoys the benefit, this leads to the addition in the spread of rich and hapless, hence, richer become richer and hapless people remain as it is. Lack of competition therefore leads to difficulty to develop public and private the sector in Bhutan.

Role of Private Sector

Creation of Employment Opportunities ;

The private sector creates and provides huge chances of employment for the both skilled and unskilled workers. It requires big figure of work to run private sectors.

Coevals of gross to the authorities ;

Large sum of the gross is generated through the private sector by the authorities by enforcing revenue enhancements on the activities carried out by the private sector. And the GDP of the state and per capita income addition and therefore populating standard improves in the economic system.

Role of Public sector ;

The gross generated by the public sectors straight into the capital formation.

The development of the populace sector besides maintains regional balance development through the development of equal substructure, roads, schools etc.

It besides reduces the poorness through equal distribution of income.


The Bhutanese economic system is chiefly divided into two parts, private sector and public sector which play a critical function in every economic activity. The denationalization of economic system has ne’er been long since the state was in the policy of isolation boulder clay 1961, yet private sector has developed at an astonishing rate thenceforth, lending big portion to gross domestic merchandise ( GDP ) , using big figure of skilled every bit good as unskilled labor and is the good index of economic development. Public sector had started runing in Bhutanese economic system before the private sector and has played a important function in economic system activity like private sector.

Since private sector is an engine to the economic development, it is recommended that authorities should hold certain policies such as inducements to develop private sector, different fiscal establishment for private sector development, revenue enhancement salvation, the enterpriser entree to the recognition ( loan ) installations at the lower involvement rate and direct foreign investing ( FDI ) to private sector. But, on other manus, authorities should non go forth public sector as an unproductive ( idle ) in economic system.


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