'We have failed economically': Bhutan turns to 'Gross National Happiness 2.0' as crisis deepens

Bhutan's governing philosophy of "Gross National Happiness" has been heralded the world over for balancing economic growth with the well-being of its citizens.

But recent discussions of "Gross National Happiness 2.0" by its newly elected Prime Minister Tshering Tobgay suggest that change on some level is underway as the country struggles with an economic crisis that's left it — as Tobgay has said— "teetering on the brink of collapse."

GNH, as it's known, has been the guiding principle of Bhutan since it was introduced by the former king Jigme Singye Wangchuck in the early 1970s.

But with youth unemployment rates of nearly 30% and about one in eight people living in poverty, has Bhutan reached a point where its quest for national happiness must change?

"Yes and no," Tobgay told CNBC in an interview on May 10. "Yes, because we've got to grow our economy."

But the tenets of GNH will not be abandoned, he added.

"Should we throw caution to the wind? No. We can grow, and we can grow in a manner that is balanced."

Bhutan will continue to strengthen its economy in ways that are sustainable, equitable and "balanced with social progress, environmental protection, cultural protection and good governance," he said.

"In these areas we have succeeded, like nobody could have imagined," he said.

But he also signaled that the principle applied in the past may have been too one-sided.

"We've been extremely cautious, very conservative, so we have lagged," he said. "We have failed economically."

Tobgay also said that Bhutan has been similarly guarded in its approach to tourism.   

"We've been extremely cautious in how we have opened ourselves to the rest of the world as far as tourism is concerned," Tobgay told CNBC. "We've been very conservative, very