Beginning in the early 1960s, King Jigme Dorji Wangchuk embarked on a program to reform the country’s economy and its quasi-feudal social system. New roads and hospitals were built, and a system of secular schools was established as an alternative to education in Buddhist monasteries. Transformation of the social system began with the abolition of slavery, the restriction of Bhutia polyandry and Nepalese polygamy, and a slight liberalization of royal rule. Bhutan’s government institutions were also restructured, though the king retained firm control over the country’s political life. Political instability occasionally surfaced, notably in 1964, when the prime minister was murdered in a dispute between rival political factions, and in 1965, when an unsuccessful assassination attempt was made on the king himself. Limited numbers of tourists were permitted to enter the country beginning in the 1970s, and in 1971 Bhutan officially ended its political isolation by joining the United Nations.

In 1972, 16-year-old Jigme Singye Wangchuk succeeded his father as king. The new king agreed to abide by the treaty with India and also sought to improve ties with China. Jigme Singye Wangchuk continued his father’s reform and development policies, channeling money into infrastructure, education, and health, but he also tried to preserve Bhutan’s rich cultural heritage and natural environment. In 1988 Bhutan launched a national policy demanding that everyone adhere completely to Buddhist traditions. Bhutanese of Nepalese origin, who constituted between one-third and one-half of Bhutan’s residents (Bhutan’s government claimed the former, Bhutan’s Nepalese the latter) and who were primarily Hindu, viewed the policy as an attempt to suppress Nepalese culture. Violent protests and ethnic antagonism broke out, and thousands of Bhutan’s Nepalese residents fled to Nepal (Bhutan’s government claimed that many of the Nepalese had resided in the country illegally). By the early 1990s it was estimated that some 100,000 Nepalese from Bhutan were housed in refugee camps in Nepal; the governments of Bhutan and Nepal held regular meetings to resolve the refugee issue but still had not reached a final agreement after several decades.

At the same time, Jigme Singye Wangchuk moved to democratize Bhutan. In the late 1990s he relinquished absolute authority. Although the king continued to wield significant power, particularly over security issues, he shared power with the Council of Ministers, whose chair developed into a de facto prime minister. The king also persuaded members of the Tshogdu (Bhutan’s national assembly, partly elected by village headmen and partly appointed by the king and the monastic order) to accept a provision that would allow the assembly to call for a vote of confidence on the monarch and even potentially require him to abdicate. In addition, at the behest of the king, extensive efforts were directed toward establishing a written constitution for Bhutan. Efforts were also made toward opening up the kingdom to free exchange of ideas. In 1999 the government lifted its prohibitions on television broadcasting and allowed its citizens access to the Internet.

By the turn of the 21st century, Bhutan had moved to embrace democracy as well as to eliminate vestiges of its historical isolation from all angles—geographic, political, economic, social, and technological. Accelerating this initiative was the abdication of the king in 2006 and the transfer of the throne to his politically progressive son, Jigme Khesar Namgyal Wangchuk. By the end of 2007 the country had held direct elections—the first in its history—for the National Council, the upper house of a new bicameral parliament. Elections in March 2008 for the National Assembly, the lower house of the new parliament, marked the completion of the change to a democratic system.

In the decade that followed, both democracy and economic development showed promising growth and success. Though the unresolved refugee crisis left the refugees in Nepal excluded from the political process, Bhutan continued to increase political participation within the country and held competitive elections every five years. Three different political parties won in the country’s first three elections. Economic growth was among the most rapid in the world, and extreme poverty was nearly eradicated. The development of both democratic institutions and economic growth was reinforced by a number of successful initiatives, such as a substantial increase in school enrollment and youth literacy.

Much of Bhutan’s headway came from India’s interest and investment in the country, which holds significant geostrategic importance to India. Bhutan’s position as a middleman and a buffer between Indian and Chinese interests was put on display in the summer of 2017 when a standoff occurred between Indian and Chinese troops in a small plateau claimed by the two countries and by Bhutan. The standoff occurred after Bhutan noticed Chinese workers attempting to build a road along the plateau, prompting India to send troops to the construction site. Hundreds of troops from each side amassed at the site, and thousands of others were in the vicinity. Though India and China both withdrew from the plateau after two months, both countries have since fortified their military presence in the region.