Can Youth Entrepreneurship Solve Bhutan’s Jobs Crisis, or Is It a Last Resort?

Bhutan’s youth are increasingly turning to entrepreneurship as jobs remain scarce, but most youth-led businesses are small, necessity-driven, and struggle to survive due to weak support beyond the start-up stage. With better finance, skills, and ecosystem coordination, youth entrepreneurship, especially for women could become a major driver of jobs and growth instead of a last-resort livelihood option.

Bhutan’s young people are coming of age at a moment of deep economic transition. Since graduating from least developed country status in 2023, the country has been slowly shifting jobs away from agriculture toward services and urban activities. But for many youths, this transformation has brought uncertainty rather than opportunity. According to a major new study by the Asian Development Bank, produced by its Economic Research and Development Impact Department in partnership with Bhutan’s Department of Employment and Entrepreneurship under the Ministry of Industry, Commerce and Employment, youth employment rates remain among the lowest in South Asia, while nearly one in five young people is not in employment, education, or training. Even those who find work often face low pay, unstable jobs, and skills mismatches, despite having more education than earlier generations.

Entrepreneurship: Hope and Reality

As formal job options shrink, entrepreneurship is increasingly presented as a solution. The report shows that interest is rising fast: between 2018 and 2022, the number of young people who saw themselves as potential entrepreneurs increased sevenfold. Yet this growth hides a difficult reality. Most youth-led businesses are small, informal, and short-lived. Many young people turn to self-employment not because they see a strong business opportunity, but because they have no better alternatives. This type of “necessity entrepreneurship” helps people survive, but rarely leads to stable incomes or business growth.

The difference between necessity and opportunity entrepreneurship is crucial. Young people who start businesses to pursue a clear opportunity earn far more than those pushed into self-employment by a lack of jobs. The gap is especially striking for women. By 2022, young women running opportunity-based businesses earned more on average than any other group of entrepreneurs, including men. This shows how much economic potential is being lost when young people, especially women, are unable to move beyond survival businesses.

Why Young Businesses Struggle to Grow

Entrepreneurship is not a one-time decision but a journey. Young people dominate the earliest stages, dreaming about business ideas or running very new enterprises, but few make it to the stage of stable, established businesses. Younger youth, especially those aged 15 to 24, are more likely to enter entrepreneurship out of necessity and face the highest failure rates. Women, too, tend to drop out as businesses mature, even though those who succeed are among the most productive entrepreneurs in the country.

Work quality is another challenge. Young entrepreneurs are more likely than regular employees to work long hours for low pay, and many experience working poverty. While opportunity-driven businesses can bring higher incomes, excessive workloads often cancel out these gains. Without better support, entrepreneurship risks becoming exhausting and unsustainable rather than empowering.

An Ecosystem Focused on Starting, Not Growing

Bhutan has made real progress in building an environment that encourages people to start businesses. Governance is strong, corruption is low, and recent reforms have made it easier to register firms. Public start-up centers, incubators, and partnerships with international organizations have helped spark interest among young people. But the report finds that support largely stops at the start-up phase.

Access to finance is one of the biggest barriers. Grants and subsidized loans help young entrepreneurs begin, but there are very few options to support growth. Strict collateral requirements, among the toughest in South Asia, and the near absence of venture capital or equity finance mean that promising businesses struggle to scale up. Many get stuck in a “missing middle,” too big for microloans but too small for commercial finance. At the same time, gaps in skills, especially in confidence, pitching ideas, managing stress, and networking, make it harder for young entrepreneurs to survive and expand.

What Needs to Change

The economic stakes are high. The report estimates that helping young entrepreneurs move from necessity to opportunity-based businesses could have added the equivalent of 1.4 percent of Bhutan’s GDP each year in recent times. To unlock this potential, the study calls for a shift in thinking. Instead of focusing mainly on creating new start-ups, Bhutan needs a full entrepreneurship development approach that supports young people throughout the life of their businesses.

That means better coordination across government agencies, stronger mentoring networks, improved access to growth finance, and education that builds both practical and soft skills from an early age. It also means tackling social attitudes that still see entrepreneurship as a second-best option compared to public sector jobs. With the right support, youth entrepreneurship could become not a last resort, but a powerful engine for jobs, inclusion, and long-term economic resilience in Bhutan.