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By the end of this year, King Jigme Singye Wangchuck, whose family has ruled over Bhutan for almost a hundred years, will officially hand over power to the people. Nobody wants to see him go, but the king himself has decided that he must take a less active role in government. By his own account, he does not want to see the throne stand in the way of the remarkable modernization under way in Bhutan.

Under the current king’s rule, this tiny Himalayan kingdom (whose population is still unknown, but which is estimated to range from 700,000 to about two million people) has become a rare innovator among developing nations. Rejecting the models of urbanization and unregulated market development usually promoted by the U.S. government, the king has crafted the framework for a political economy based on a theoretically harmonious mix of representative government, south-Asian-style capitalism, traditional religious values, environmentalism, hydropower, tourism, mandated preventative medicine, and universal health care.

Now comes the real test: can Bhutan and the king’s enlightened framework withstand the messy business of democracy and development, and the problems that tend to follow? “With China, India, and Nepal sitting on its borders,” says Stephen Cohen, a senior fellow at the Washington, DC, policy think tank the Brookings Institution who specializes in south-Asia security matters, “and donor nations in the West constantly pushing new models upon the developing nations they fund, anything can happen.”

But if Bhutan can prove that democracy, social equality, sustainable development, environmental protection, and limited technology are compatible with Buddhism and 21st-century modernization, it will be an interesting example for other poor nations who want modern technology and economies–but who want them on their own terms.

Or as the king explained at a conference in his country last year, “There must be some convergence among nations on the idea of what the end objective of development and progress should be.”

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