Since 1961 government has directed the development process through a series of Five-Year Plans. The first three Five-Year Plans (1961/2-1975/6) placed an emphasis on the development of basic physical infrastructure, with other significant areas being social services (notably education and health facilities) and agricultural inputs. In the Fourth and Fifth Plans (1976/77-1986/7) the distribution of outlay became more balanced, with a greater emphasis on the development of industry, and the objectives of national and regional self-reliance and decentralization. The Sixth Plan (1987-92) introduced the objective of the preservation of national identity, and the Seventh Plan (1992-97) that of sustainability. The broad objectives of the Eighth Plan (1997-2002) are as follows: (a) Self-reliance; (b) Sustainability; (c) Preservation and promotion of cultural and traditional values; (d) National security; (e) Regionally balanced development; (f) Improving quality of life; (g) Institutional strengthening and human resource development; (h) Decentralization and community participation; (i) Privatization and private sector development.

Guiding principles for the future development of the nation are complemented by a single unifying concept, the distinctly Bhutanese notion of Maximizing Gross National Happiness. Although first propounded by His Majesty the King in the late 1980s, some of the principles embodied have guided the nation's evolution over a much longer period, being rooted in the cultural heritage. In Bhutanese culture the original definition of development was based on the acquisition of knowledge. In a similar vein the process of communal enrichment was based on a dynamic in which those who possessed superior knowledge imparted that knowledge to others. In the Buddhist religion this concept of personal development was further refined to entail overcoming the delusions arising from ignorance, aggression, and the desire for consumption and acquisition.

The concept of Gross National Happiness was articulated to indicate that development has many more dimensions than those associated with Gross National Product, and that it should be understood as a process that seeks to maximize happiness rather than economic growth. Although economic growth remains a precondition for the achievement of self-reliance, improved standards of living and enlarged opportunities and choices, Gross Domestic Product is perceived as insensitive to issues such as personal disenchantment, social problems and natural resource depletion. For Gross National Happiness the individual is placed at the center of all development efforts, recognizing that people have material, spiritual and emotional needs. It asserts that spiritual and emotional development cannot and should not be defined exclusively in material terms.

The aim of Maximizing Gross National Happiness, as a particularistic Bhutanese basis for development planning, promotes several important values. However, to provide direction to the Kingdom's long-term development, the concept must be translated into tangible goals. Towards this end, five themes are identified, providing powerful objectives for steering the process of change: human development, the promotion and preservation of culture and heritage, balanced and equitable socio-economic development, good governance, and environmentally sustainable development. Human development aims at maximizing the happiness of the population and enabling the fulfillment of its innate potential. Concerted efforts to produce sustainable improvements in the standard of living, quality of life, choices and opportunities need to take place within a framework of traditional values and ethics. The dynamic articulation of an unambiguous cultural imperative fulfills as important role as a source of values and inspiration for a society in transformation, meeting spiritual and emotional needs, maintaining a distinct identity, and cushioning the people from some of the negative impacts of modernization.

The benefits of development should be shared equitably between different income groups, genders and regions, in ways that promote social harmony, stability and unity, and contribute to the maintenance of a just and compassionate society. The system of governance needs to be developed to reduce dependence on others, to manage an increasingly complex process of development, and to enlarge opportunities for people at all levels to participate more fully and effectively in decisions that affect them. Development choices must embody the principle of environmental sustainability, protecting the biological productivity and diversity of the natural environment in the interests of present and future generations. The continuing challenge resides in the articulation of an ongoing balance between material and non-material components of development, incorporating new ideas and principles where appropriate, to give still firmer substantive content to the concept.