When the World Bank’s latest “Ease of Doing Business” Report ranked Bhutan as the 71st easiest place to do business among 189 economies around the world, there was likely to have been some understandable pride in the office of Prime Minister Tshering Tobgay.

Making it into the group of Top 100 had been a target of the new government when it took office in 2013.  It was also a key point mentioned during my visit to Thimphu when I helped keynote a Better Business Bhutan summit in March 2014.

Last year, Bhutan had been ranked 125 in the World Bank assessment.  A closer look at the fine print though reveals that last year’s and this year’s rankings are not completely comparable.

A change in the methodology had Bhutan actually ranked 70th last year, indicating a drop this year in the rankings by one.  Yet, regardless of the changed methodology, the World Bank rankings remain an important assessment of efforts to improve the regulatory environment for business.

The Doing Business report specifically sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations.  As the World Bank notes, however, the report does not measure the full factors, policies and institutions that affect the quality of an economy’s business environment or its national competitiveness.

“It does not, for example, capture aspects of security, the prevalence of bribery and corruption, market size, macroeconomic stability, the state of the financial system or the level of training and skills of the labor force, “ the World Bank report reads.  Indeed, Bhutan’s struggling entrepreneurs are perhaps best able to assess these and other on-the-ground realities.

Strikingly, the World Bank assessment of Bhutan’s environment for starting a business dropped six places, from 85th to 91st.  And, though I might question this particular ranking, the World Bank placed Bhutan at bottom, at 189, when it comes to the issue of “resolving insolvency.”

So, what more can be done to spur Bhutan’s entrepreneurs and in which sectors?  Much focus understandably is on agri-business, eco-tourism and other enterprises that leverage the nation’s traditions and rich cultural and natural heritage, which regularly bring me back to Bhutan.  Here though is one out-of-the box idea and question: what if Bhutan were to become a hub for tech innovation, given the nation’s educated and English-literate workforce.

At the recent Milken Institute Asia Summit held this September in Singapore, Kevin Klowden, an economist colleague and managing director of the Milken Institute California Center in Los Angeles, and I shared several lessons from America’s “Golden State” for Asian nations seeking to become centers of invention and innovation.

California has been associated with the rewards of risk taking for decades. Backyard entrepreneurs have been transformed into boardroom successes. Those California dreams of tech success have since gone global, capturing the imaginations of would-be tech entrepreneurs everywhere, whether in Bangalore or Silicon Valley, or perhaps one day Thimphu and Paro Valleys.

But the key for South Asia is for country policy makers to foster an entrepreneurial ecosystem to create consistent levels of innovation.  This goes beyond the Doing Business rankings.

As Klowden and I argued, long-term success in tech typically includes the ability to not only improve on, but also to be the center of innovation – to take steps to nurture and boost home-grown innovations, risk-takers and successes.

So what lessons does California offer up Bhutan, India and the rest of South Asia?  Here are three that Klowden and I shared in Singapore through the Straits Times at our second annual Milken Institute Asia Center-organized summit.

First, South Asian nations must commit to developing more great research universities – world-class institutes that will both train skilled individuals and advance the sharing of basic research and technology.  According to the Shanghai Academic Ranking of World Universities, 2015, the United States is home to 16 of the top 20 world research universities.

In contrast, Asia’s highest-ranking research university is the University of Tokyo at No. 21; no non-Japanese university in Asia makes the top 100.

Second, South Asian nations must embrace failure – not as an end, but as a means to success.  Perhaps one of the most important lessons and strengths of California is the ability of its entrepreneurs to fail and try again.  By some accounts, two-thirds of Silicon Valley startups do not last five years, failing ever to make it to an Initial Public Offering (IPO) stage.

Quite often, the same people who started one company are willing and able to try again.  The ability to fail and learn is a significant factor in many companies’ successes in the state.

Third, South Asian nations must move to innovate in the financing of start-ups.  Risk taking cannot be left to entrepreneurs alone. By some accounts, up to 50 percent of all venture capital activity in the world flows through California. The access to significant investors at numerous different stages plays a significant role for California’s success in seeding tech innovation.  Every country, including Bhutan, must take further steps to develop this resource, including policy and regulatory changes.

Of note, India according to the World Bank report is only the 130th easiest place to do business.  And it ranks 155th out of 189 when it comes to ease of starting a business.

Asia’s family entrepreneurs are a great asset, including in India and across South Asia.  But a key to growth will be recognizing that while venture capital funds do involve personal relationships, they also involve assessing and taking risks with relative strangers. This is a marked contrast to basing investment decisions primarily on the longstanding family relationships that often work in Asia.  This distinction is important.

In the United States, there is a growing consensus on the value of promoting financial-market understanding and of working to expand access to capital, strengthen and deepen financial markets, and develop innovative financial solutions to the ongoing challenges to America’s sustained economic growth.

The tech sector remains a U.S. success story that has gone well beyond any Silicon Valley roots. That same reinvention and expansion of America’s tech industry now has people rightly California dreaming, all around this interconnected world of ours, including understandably in South Asia.

Kudos to Bhutan in recognizing the critical importance of the private sector in the nation’s growth and development.  Moving forward now will mean doing even more to build on past progress to ensure Bhutan can become a much better place to do business.

Curtis S. Chin

Curtis S. Chin, a former U.S. Ambassador to the Asian Development Bank, is an Asia Fellow of the Milken Institute and managing director of advisory firm RiverPeak Group, LLC. 

Follow him on Twitter at @CurtisSChin.