Bhutan nestles in the Himalayas between India and China. Most people in the west don’t know much about this tiny, remote and impoverished kingdom – except that its monarchy promotes the philosophy of “Gross National Happiness” (GNH), and monitors the country’s success not just by economic success, but by the well-being of its people.

It is an idea that is in vogue. In recent years, governments worldwide have sought to emulate Bhutan’s apparent success. As Niki Seth-Smith noted in a recent piece for the New Humanist: “In 2011, the UN invited its members to measure the happiness of their people and use this to inform policy. Since then, there have been two World Happiness Reports, the last of which was published in September 2013. “

But is Bhutan – the original advocate of this policy – struggling to maintain the balance between the spiritual and material? Tho Ha Vinh, programme director of the GNH centre, an NGO dedicated to supporting the movement in Bhutan, has expressed concern that economic development in Bhutan could be jeopardising the country’s dedication to contentment. "The danger is that the kind of mindless growth and modernisation that has taken place in most of Asia could also come here," he told the Guardian. "Many Asian countries have had phenomenal economic growth but at what cost, in terms of environment, in terms of social fabric, in terms of cultures and values."

Most know Bhutan as “the happiest nation on earth”, but it ranks 167th out of 193 countries measured by gross domestic product, and has a major problem with poverty and unemployment. The country, which has a population of just 740,000, is experiencing urbanisation as young people move to the capital, Thimpu, in search of work. But the private business sector only emerged about 20 years ago, so it is fair to say that its economy is in the very early stages of development. After centuries of being almost entirely cut off from the outside world, Bhutan is also opening its doors to the outside world and taking steps to liberalise its economy, in a much-needed effort to provide jobs and reduce poverty. That means it is belatedly facing the same challenges as other developing nations: urbanisation, the gradual erosion of traditional family structures, and all the associated societal changes.

While the idea of happiness indices has been dismissed by critics in the West as meaningless, in Bhutan, it has a deep root in spirituality. The country’s majority religion, Buddhism, informs its emphasis on people’s relationship to nature, and a middle way between asceticism and indulgence. Tho warns that the lives of young people are increasingly separate from religion.

The concern that globalisation is undermining traditional indigenous ways of life is hardly unique to Bhutan: similar concerns have been expressed all over the world. But it is particularly interesting in Bhutan given the way that its GNH index has inspired policy globally. The prime minister, Tshering Tobgay, has previously spoken of the need to improve business conditions while retaining an emphasis on ethics, well-being, and sustainability. He and others have said that the country could jump straight to a green economy, rather than going through the environmentally destructive industrialisation that most other developing and developed nations have experienced.

It is an alternative model to the rapid march towards industrialisation and development that its economic juggernaut neighbours, India and China, are pursuing. Whether Bhutan’s dedication to happiness and sustainability can be maintained remains to be seen; Western nations may be too busy compiling their own wellbeing measurements to take much notice.