Economy of Mongolia: description and characteristics. Basics of Economics Economy of Mongolia
UDC 339.9(517.3)
A.P. Sukhodolov, Yu.V. Kuzmin
ECONOMY OF MONGOLIA IN THE GREATER EURASIA SYSTEM
The article presents characteristics of the modern economy of Mongolia, its problems and difficulties. The main attention is paid to the analysis of foreign economic relations of Mongolia in East Asia with the main partners in the region. Issues of foreign investment in the Mongolian economy, especially the country's raw materials sector, as well as the formation of China-Mongolia-Russia transport corridors are considered.
Key words: economy of Mongolia; raw materials; foreign investment; Russia; China; "third neighbor"; transport corridors; national interests.
A.P. Sukhodolov, Yu.V. Kuzmin
ECONOMY OF MONGOLIA IN THE SYSTEM OF GREATER EURASIA
The article presents the characteristics of the current economy of Mongolia, its problems and difficulties. The focus is on the analysis of foreign economic relations of Mongolia with its key partners in East Asia. The authors consider the issues of foreign investments into the Mongolian economy, namely the country's commodities sector and formation of the transport corridor China-Mongolia-Russia.
Keywords: Mongolia's economy; natural resources; foreign investments; Russia; China; the "third neighbor"; transport corridors; national interests.
The modern world economy has entered a zone of economic instability and reformatting. Economic data
processes and trends took explicit form and manifested themselves after 2014. Previously, they were of a hidden nature and manifested themselves in a very veiled form. For a long time, globalization seemed unshakable and eternal. The processes of globalization have become universal and have taken over the economic, political, scientific, information and cultural spheres. But it turned out that this was not so and a lot began to change.
A serious structural reform is taking place in the world, a multipolar economic order is being formed; The US attempt after the collapse of the USSR to create a unipolar world, focused on one country, one currency, one liberal economic model, failed. The countries of the world did not accept this system and clearly and directly resisted it. Attempts to impose American order in the countries of Western Asia through “color revolutions” also encountered stiff resistance and opposition. The countries of Islamic civilization have their own values, more ancient and deeper than the young American model, which is one of the Western economic models, and does not represent its best part. A social market model, which is especially successful in France, Germany, and Sweden, may be more attractive in the global economy. Unfortunately, we have to admit that it is also exhausting its economic capabilities and needs serious socio-economic adjustment and, apparently, this will happen in the coming years. In the last decade, the economic experience of Finland, Norway, and Denmark has been quite successful, where the interests of the elite and the population are harmoniously combined. Of course, these are very small countries where successful education systems, social assistance and support systems are possible in countries that are small in population and area.
Over the past 25 years, the economy of Mongolia has gone through a difficult path of transformation of the national economy from state-planned to market-based. Mass privatization of state property was carried out in stages; now the share of the private sector is 80%. Along this path there were not only achievements, but also losses. The share of industrial production was reduced. In 1990-2003 Gross industrial production declined
approximately 20%, the lowest point was in 1993 -40%. The volume of the mining industry doubled and the volume of manufacturing production decreased 2.5 times (Grayvoronsky, 2007, p. 25). The production of non-ferrous metals (copper), gold, coal, and oil is growing rapidly.
The economy of modern Mongolia is going through a difficult period of its development. The global economic crisis and the fall in demand and prices for Mongolia's raw materials (copper, coal, oil, etc.) have led to a sharp reduction in company profits, employment and state budget revenues. The lack of competition for Mongolia's raw materials and purchases only by China led to a sharp decline in the price of copper, coal, and agricultural raw materials.
Mongolia's GDP growth in 2014 was 7.9%, in 2015 -2.3%. There were previously years when GDP growth reached 14% per annum when commodity prices were stable and high.
As is known, Mongolia has large world-class coal deposits (Tavantolgoi), copper (Oyutolgoi, Erdenet), which have been developed and are already being exploited. Export of raw materials is the leading item of budget income, more than 60% of budget income. Therefore, the fall in world prices for raw materials immediately affects the economic situation of the country, the income of the population and its employment. This is the weak point of the modern Mongolian economy. This circumstance is also aggravated by the fact that the main buyer of these raw materials is one buyer - China, which enjoys a monopoly position and dictates the pricing policy on the Mongolian market. Under these conditions, diversification of the Mongolian economy (and above all the rapid development of manufacturing and knowledge-intensive sectors of the economy) and the search for new foreign economic partners on the world market is an urgent need for the stable development of modern Mongolia.
Mongolia is landlocked and this complicates its foreign economic relations. Its location between Russia and China, dependence on economic and political relations with neighboring countries seriously influence the economic situation of the nomadic country. Currently (beginning of September 2017) Mongolia is looking for options for transporting Mongolian-
of coal through the seaport of Vladivostok. This will allow you to avoid the low price offered by Chinese buyers, as it will allow you to enter alternative markets in East Asia (South Korea, Japan, etc.). It should also be noted that Mongolia has a fleet that flies under the Mongolian flag (more than 200 ships from various countries). Mongolia, within the framework of the Eastern Economic Forum in Vladivostok, addressed the issue of training Mongolian maritime specialists. The most difficult problem is railway tariffs for the transportation of goods; in this case, preferential tariffs are needed.
Mongolia was already part of the Qing Empire and the Soviet bloc, so it wanted to maintain economic and political independence. Statements about Mongolia's policy of neutrality and the practical implementation of this provision are in little agreement. Currently, Mongolia's economy is under significant economic influence from powerful China (investment, foreign trade). During the last presidential campaign, all presidential candidates emphasized the high dependence of the Mongolia economy on its southern neighbor and considered it necessary to expand Russian-Mongolian economic cooperation in order to balance relations in the Russia-Mongolia-China triangle.
Mongolia has placed and continues to place great hopes on the so-called. Mongolia’s “third neighbor” represented by the USA, Japan, South Korea, and Western European countries. Unfortunately, the scale of economic cooperation and investment is small and does not compensate for the scale of cooperation in the triangle. Modern Mongolia is actively expanding economic cooperation with countries that were not previously its active partners: Iran, the UAE, Israel, Turkey, etc. There are significant opportunities for expanding economic and scientific cooperation. For example, more than 400 Mongolian students are already studying in Turkey; in distant Australia - more than 200 students and undergraduates.
The largest and closest economic and political relations connect Mongolia with Japan and South Korea. The largest number of Mongolian migrants work and study
in South Korea, significant scientific ties between Mongolia and Japan, investment support for Mongolia also from Japan and South Korea, which are considered as close and related Asian peoples. The youth of Mongolia also gravitate toward Korean youth culture. Both countries are perceived in Mongolia as Asian countries that have achieved outstanding results.
Main economic problems: lack of investment, small population (3 million people) and its uneven distribution in the center of the country, Ulaanbaatar (1.4 million people), political instability and frequent changes of Mongolian governments (15 governments in 10 years), corruption and the export of capital.
Frequent changes of governments, changes in legislation in the field of mining and taxation in this area lead to an outflow of foreign investors and frequent lawsuits. The corruption component led to enormous social stratification of Mongolian society and social instability. The investment forum in Ulaanbaatar at the beginning of September 2017 noted the need to develop specific and stable rules for attracting foreign capital and reducing administrative obstacles.
Active mining leads to the displacement of Mongolian nomads from their traditional places of residence and destruction of the environment. Also, desertification processes have reached threatening proportions for Mongolia. Desertification processes in Mongolia have a natural basis associated with global warming and the influence of the development of pastoralists, due to the massive breeding of livestock (80 million heads of livestock), especially Mongolian goats.
The Mongolian government and the country's scientific elite are interested in the development of the processing industry and knowledge-intensive production. Mongolian scientists and inventors offer various high-tech technologies that are supported by business and government agencies. Mongolian youth are talented and dynamic, they actively receive education at the best foreign universities, participate in scientific projects and win intellectual competitions. So, in August
At the 2017 Asian Games, the Mongols won 73 medals out of 90 possible awards. Over time, this can turn into quality. True, this also has a downside - the migration of talented Mongolian scientists abroad.
Mongolia's special position between two major powers: Russia and China has also acquired its economic advantages in recent years. The transformation of China into a global economic power that is interested in stable China-Europe transport corridors, the formation of the “One Belt - One Road” transport corridors, the new Silk Road includes Mongolia as one of the important links of these projects. The inclusion of Mongolia in the system of international railway, air and road corridors will strengthen the country's economic position in the international economy, especially in Inner Asia. Mongolia is considered as one of six options for transport corridors between China and Western Europe. Currently, a transport corridor from China through the countries of Central Asia is actively operating, which allows the Chinese side to successfully maneuver with other options and partners. In August 2017, a working meeting of representatives of transport structures of Russia, Mongolia and China was held in Ulan-Ude and it was decided to form the transport corridor Tianjin - Ulaanbaatar - Ulan-Ude in two versions: railway and road. Implementation of this Project is scheduled for early 2018. We are talking about modernizing existing roads and improving border crossings, as well as creating modern infrastructure in transit countries.
Mongolia is improving the quality of the country's railways and roads, increasing the speed of transportation, and increasing the number of border crossing points for passengers and goods. This will improve or re-create modern roads, international airports, and increase the number of modern jobs in the service and tourism sectors. Discussions also continue in Mongolia: which railways should be built in Mongolia: Russian or Chinese standards?
Construction of a new railway has begun from Erdenet to the border with Tyva; in the future it is planned to connect it with the road along Tyva, which is just being built. This will dramatically shorten the route to Europe and reach the developed regions of Southern Siberia.
As you know, China is currently actively creating a system of transport corridors to Europe through the countries of Central Asia, partially affecting Russia. This corridor is shorter in time than the Russian Trans-Siberian Railway, and therefore indirectly increases competition. China is actively creating hubs in countries around the world, that is, warehouses for Chinese products, roads, bridges and other transport corridors necessary for the rapid delivery of Chinese goods or their production in a given territory. For example, the world's longest freight railway corridor Harbin-Hamburg was launched. Also, for example, in Belarus, near Minsk, the so-called Great Stone Industrial Park is being created, on an area of 80 km2. The entire project is estimated at approximately $80 billion.
High rates of economic growth in the PRC, the emergence of a number of sectors of the country's industrial production to leading positions in the world, the formation of a new transport system and logistics in Northeast Asia, including the so-called “New Silk Road”, will create significant problems and difficulties for the Russian economy, which is losing its economic position in the modern international economy, due to economic sanctions, the outflow of domestic and foreign capital from the country and the economic model of Russia’s development that is inadequate to the requirements of the time. The serious strengthening of Russia's geopolitical and military status has so far compensated for the economic bloc, but in the future this will manifest itself in an increasingly negative light.
Strategic partnership with China also has its limits; the very concept of strategic partnership is generally unacceptable for modern China. The JunGuo State (Middle State or Middle Empire) did not and still views neighboring countries and peoples as strategic partners, but only as temporary allies, and not always with equal rights.
nym. We consider this political, economic and military partnership to be tactical on China’s part until it strengthens its position to a level equal to or close to the military-geopolitical potential of the United States, for direct competition and confrontation (emphasis added by the author). The Russian side needs to specifically calculate not only the positive prospects, but also the difficulties and problems that will arise during the implementation of Projects initiated and promoted by the Chinese side.
The economic superiority of the PRC in the near future will be complemented by military-geopolitical superiority and a higher scientific level of world leadership. Expenditures on science and education in China, which are many times greater than in Russia, are already bearing their first fruits, and in the near future they will show the world real world-class scientific successes.
Russia declares economic, political and scientific interest in Russian-Mongolian cooperation, but so far this is not comparable with the size of Sino-Mongolian economic cooperation, Chinese investments and opportunities. Mongolia's economy is increasingly dependent on China. The received loans will have to be repaid in the near future; it has not yet been possible to find other buyers of Mongolian raw materials and prices for them remain low. The Chinese leadership reacted rather harshly to the Dalai Lama’s visit to Mongolia, and most importantly did not provide the promised loan of $4 billion.
In general, the position of Russia and Mongolia in the Russia-Mongolia-China triangle is in some sense quite similar, although not identical. According to the structure of their exports to China, they are raw material suppliers for the rapidly growing Chinese economy, a kind of appendage of the economy or the periphery of the Chinese economy, which is rapidly moving towards world leadership. This cooperation is more consistent with the national and economic interests of China, and not of Russia and Mongolia. Further development in this direction will have negative consequences for the economies of Russia and Mongolia, especially the Mongolian economy, which is seriously dependent on China.
The Mongolian economy needs to dramatically increase its manufacturing industry, modern technologies in agriculture, energy, and communications. Another large city has to be created and developed in order to relieve the overpopulation and environmental problems of the Mongolian capital. Investing in breakthrough Mongolian technologies in certain areas (medicine, alternative energy, electronics, etc.) will make it possible to use the accumulated intellectual potential of Mongolian scientists. The intensive development of regional economic relations between Mongolia and Buryatia, Tyva, the Irkutsk region and the Trans-Baikal Territory will make it possible through joint efforts to intensify the national economy and maintain independence, and improve the quality of life of the population of Mongolia.
Sukhodolov Alexander Petrovich - Doctor of Economics, Professor, Rector, Baikal State University, 664003, Russian Federation, Irkutsk, st. Lenina, 11, e-mail: [email protected]
Kuzmin Yuri Vasilievich - Doctor of Historical Sciences, Professor, Department of World Economy and International Business, Baikal State University, 664003, Irkutsk, st. Lenina, 11, e-mail: [email protected].
Alexander P. Sukhodolov - D.Sc. in Economics, Professor, Rector, Baikal State University, 11 Lenin St., 664003, Irkutsk, the Russian Federation, e-mail: [email protected].
Yuri V. Kuzmin - DSc in History, Professor, Department of World Economy and International Business, Baikal State University, 11 Lenin St., 664003, Irkutsk, Russian Federation, e-mail: [email protected].
Features of the Mongolian economy
Mongolia is an agricultural and industrial state that today trades with more than 80 world countries.
Note 1
Until the nineties of the 20th century, 90% of trade in Mongolia was trade with the Soviet Union, today more than 40% is trade with the Russian Federation and China, the rest is trade with highly developed countries: Japan, Switzerland, South Korea and the USA.
Most people are urban dwellers, however, Mongolia's economy today is concentrated in industries such as mining and agriculture. A significant portion of the country's industrial production comes from mineral resources, including copper, tin, molybdenum, coal, tungsten and gold.
Due to the harsh continental climate, the country has an agricultural sector that is vulnerable to natural disasters during periods of severe cold and drought. The country includes small arable lands, about 80% of the territory is used as pasture. Most of the rural population produces livestock, which consists of sheep, cattle, goats, camels and horses. Mongolia has more livestock per capita than any other country in the world.
Specifics of Mongolia's industry
Mongolian industry is quite extensive; this country has opportunities for the development of a large number of manufacturing industries, the products of which are exported to other countries, and are also in great domestic demand.
Note 2
Initially, the country developed agriculture, food production, textile and leather products. After World War II, the state received significant financial assistance from the USSR and China, which contributed to a significant expansion of industry.
In modern conditions, there are enterprises in Mongolia:
- steel foundry,
- iron foundry,
- coal mining industry.
The location of industrial enterprises is concentrated in more than 20 cities, while the bulk of the output is consumed domestically in the state. Today, more than 1,000 types of agricultural products are offered in Mongolia: products made from fur, leather, wool, and furs and leather themselves are also sold. These products are exported and also used by the population of the country. To a large extent, Mongolia works for itself, while having everything it needs.
Mining industry of Mongolia
Mongolia has a widely developed mining industry. But, despite the abundant mineral deposits, they are characterized by limited development. Mongolia has four brown coal deposits, concentrated in Nalaikha, Sharyngol, Darkhan, and Baganur. The southern part of the country in the region of the Taban Tolgoi mountain range is characterized by the presence of hard coal; the geological reserves of coal in this place can be calculated in billions of tons.
Deposits of tungsten and fluorspar with average reserves have been known and developed for a long time. A copper-molybdenum deposit was found in Treasure Mountain. This deposit leads to the creation of a mining and processing plant, around which the city of Erdenet is built.
Oil was discovered in Mongolia in 1951, after which an oil refinery was built in the city of Sain Shanda (a city southeast of Ulaanbaatar), which is located near the border with the Chinese Republic. The plant existed for 20 years; in 1970, oil production ceased. Also, large deposits of phosphorites were discovered near Lake Khubsugul, and their mining is beginning. But soon, due to environmental reasons, all work is reduced to zero.
Before the start of reforms in the country, with the help of the Soviet Union, the search for zeolite, a mineral of the aluminosilicate group, which is used in livestock and agriculture, as adsorbents and biostimulants, was carried out unsuccessfully.
Today, the main mining industry in Mongolia is the coal industry, with the advantage of brown coal mining. The main part of coal production is concentrated in the SharynGol coal mine, the annual production of which is more than 1 million tons. It is located near the city of Darkhan, and in the Nalaya mine (capacity is more than 600 million tons). Smaller sections are present in the Under Khan area and other areas.
Electrical energy is produced at thermal power plants, the largest of which is located in Darkhan.
Manufacturing industry
Mongolia's manufacturing industry includes light and food industries. These industries account for more than 1/2 of the state's gross industrial output and more than 1/2 of the employed workers in the state.
Larger enterprises are represented by an industrial complex with eight factories and factories in Ulaanbaatar, Choibalsanei.
The building materials industry includes a house-building plant in Ulaanbaatar and a brick and cement plant in Darkhan.
First of all, the local industry was based on the processing of livestock raw materials, and the main types of products were fabrics, leather goods, food products and felt.
A large number of new industrial companies appeared in Mongolia after the end of World War II. The period of growth was characteristic of the fifties and sixties, at that time the state received large financial assistance from China and the USSR.
Since the eighties, local industry has provided about a third of the entire country's gross national product. After the end of World War II, the share of heavy industry in the total volume of industrial production increased significantly. There are more than 2 dozen cities in the country with enterprises of national importance. In addition to Ulaanbaatar and Darkhan, the largest cities are Erdenet, Sukhbaatar, Baganur Choibalsan.
Mongolia produces a large number of industrial and agricultural products, a large share of which is consumed in the country. Furs, leather and fur products, leather and wool, livestock and animal products, as well as molybdenum ore, phosphorites and fluorites are intended for export.
GOU VPO "REA im. G. V. Plekhanov"
Department of World Economy
Test
by discipline
"World economy"
"Analysis of the Mongolia Economy"
Performed:
3rd year student FF
groups 2308
Bukhadeeva E.B.
Checked by: Ph.D.
Avturkhanov E.M.
Moscow
Stages of economic development………………………………………………………...3
Type of economic development……………………………………………………………5
Level of economic development………………………………………………………6
Social structure of the economy…………………………………………………….....6
Economic strategy and policy. Characteristics of GDP………………7
Industry……………………………………………………………7
Agriculture………………………………………………………….....9
Mineral resources………………………………………………………9
Transport………………………………………………………………………………...10
Communication………………………………………………………………………………….11
Quality and use of labor…………………………….12
Foreign economic relations. The role of the country (region) in international production, international division of labor, economic integration…………………………………………………………………………………12
Forecast and development of economic relations with Russia…………………13
Forecast of socio-economic development of the country (region)……..16
Conclusion…………………………………………………………………………………17
List of used literature……………………………………………………...18
Mongolia is a landlocked country located in East-Central Asia, bordered by Russia to the north and China to the south, west and east. With an area of 1,564,116 km² and a population of about 2.9 million, Mongolia is the 19th largest country in the world in terms of area, but at the same time it is one of the most sparsely populated countries. About 20% of the country's total population lives on less than $1.25 a day.
Mongolia's economy is traditionally based on agriculture and pastoralism. Mongolia also has extensive mineral deposits: copper, coal, molybdenum, tin, tungsten, gold, the development of which accounts for the majority of industrial production.
Stages of economic development
Communist era. The country depended on the USSR for fuel, medicines, and auxiliary raw materials for factories and power plants. The former USSR was also the main consumer of Mongolian industry. At the end of 1980, the government began to improve relations with non-communist Asia and Western countries, and tourism was launched. USSR assistance, about one third of GDP, 80% of all international relations, disappeared almost overnight in 1990-91 during the collapse of the Soviet Union (1985-1991). Mongolia was in a deep recession, which was prolonged by the (Mongolian People's Revolutionary Party) reluctance to implement serious economic reforms.
Transition to a market economy. Between 1990 and 1993, Mongolia suffered from triple inflation, rising unemployment, shortages of basic goods and a rationing system. During this period, production fell by one third. Following reforms and a change in government policy towards promoting private enterprise, economic growth began again in 1994-95. Unfortunately, because this growth was driven in large part by a glut of bank credit, especially for the remaining state-owned enterprises, economic growth was accompanied by a severe weakening of the banking sector. GDP grew 6% in 1995, largely due to a boom in copper prices.
The DUC (Democratic Union Coalition) government of 1996-2000 set out to move towards a free market economy, loosening price controls, liberalizing domestic and international trade, and attempting to restructure the banking system and the energy sector. National privatization programs were carried out, and the process of attracting foreign direct investment in oil production, cashmere companies and banks began. Reforms carried out by the ex-communist opposition MPRP and political instability associated with constant changes in government left the country in crisis until the DSK government came to power. Economic growth continued in 1997-99 after stopping in 1996 due to a series of natural disasters and increasing world prices for copper and cashmere. Government revenues and exports, average real economic growth stabilized at 3.5% in 1996-99 due to the Asian financial crisis, the 1998 Russian financial crisis and deteriorating commodity markets, especially copper and gold. In August and September 1999, the economy suffered from a temporary ban by Russia on the export of oil and petroleum products. Mongolia joined the World Trade Organization (WTO) in 1997.
Present tense. Mongolia's dependence on trade relations with China means that the global financial crisis will impact the Mongolian economy, with a serious setback in economic growth. However, while all countries are in the process of post-crisis economic recovery, Mongolia suffers from the winter itch of 2009-2010, resulting in a decline in livestock numbers, which seriously affects cashmere production, which accounts for approx. 7% of the country's export earnings.
According to the World Bank and IMF estimates, real GDP growth fell from 8% to 2.7% in 2009, and exports fell 26% from $2.5 billion to $1.9 billion after promising steady growth until 2008 of the year. Because of this, it is predicted that from 20,000 to 40,000 people. (0.7% and 1.4% of the population, respectively) will die due to poverty, which would not have happened if not for the crisis.
At the end of 2009 and beginning of 2010, however, the market began to recover again. Having identified problems and learned from its previous economic failures, the government is carrying out legislative reform and tightening fiscal policy, which implies the development of the economy only in a positive direction. In February 2010, foreign assets were calculated at US$1,569,449 million, new trade agreements are currently being formed, and foreign investors are keeping a close eye on the “Asian wolf,” the code name for the Mongolian economy. The term was coined by Renaissance Capital in its Blue Sky Opportunity report. They claim that Mongolia could become the new Asian tiger or the non-stop "Mongolian wolf", as they prefer to call Mongolia's economy. Recent developments in the mining industry and the quantitative growth of foreign investors confirm that the “Mongolian wolf” is ready to take the leap. The aggressive name of the term reflects development opportunities in the capital market, as well as good prospects in the mineral resources industry. The Mongolian economy has a chance to retain its title as a fast-growing and developing economy.
Today, Mongolia's economy is developing very dynamically; the country is one of the most promising markets in the entire Asia-Pacific region. According to experts from the World Bank, the International Monetary Fund and other authoritative organizations, this country is among those in which the pace of economic development in the near future will be one of the highest. In particular, World Bank experts believe that over the next ten years, economic indicators will grow by an average of 15% every year.
Main industries
Mongolia's economy is concentrated in several sectors, such as agriculture and mining. This is even though most people live in cities. A significant part of the country's industrial production consists of: coal, copper, tin, molybdenum, gold and tungsten.
Moreover, just a few years ago there were a huge number of poor people in the country. Back in early 2010, almost 40% of the population lived below the poverty level. In recent years, this figure has been declining rapidly.
In the structure of the GDP of the Mongolia economy, the largest part is occupied by mining, amounting to almost 20%. Forestry, agriculture and fishing account for approximately 17%, with retail wholesale trade and transport accounting for more than 10%. Manufacturing, real estate, communications and information technology also have their share in GDP.
Most of the working-age population is concentrated in agriculture (more than 40%), about a third works in the service sector, and almost 15% in trade. The rest of the people work in manufacturing, the private sector, and the mining industry.
Economy type
To understand the financial structure of this state, it is important to understand what kind of economy Mongolia has. It is in the stage of transition from one socio-economic state to another, while occupying a certain intermediate position between developing and economically developed countries. Currently, Mongolia is a country with a transition economy.
At the same time, during the transformation process, the structure of production, property relations, and management tools are transformed.
The economy of Mongolia is an example of a transition economy. The collapse of the socialist system at the end of the 20th century also affected this state. In all countries that were previously part of the socialist camp, the transition to market relations began. The need for urgent reforms in the country matured back in the 80s. Perestroika, which began in the Soviet Union, only accelerated this process. Large-scale socio-economic transformations began to take place after 1991.
Mongolia is a country with a transition economy that has been actively developing recently. All the main criteria for a state that is at a transitional stage of its socio-economic development are present here. These are privatization and reorganization, macroeconomic stabilization, liberalization. Building a market economy in Mongolia is the ultimate goal, which today can be considered partially achieved.
Natural resources
Natural resources are of great importance for the economic development of Mongolia; there are really a lot of them here.
In particular, the country has three large brown coal deposits; high-quality hard coal has been discovered in the south, the geological reserves of which, according to preliminary estimates, amount to several billion tons. Deposits of tungsten, which are considered average in terms of reserves, have been successfully developed for a long time.
Copper-molybdenum ore is mined in Treasure Mountain. The discovery of this mineral led to the construction of a large mining and processing plant, around which an entire city grew. Today Erdenet is home to almost one hundred thousand people.
An important place in the economic development of Mongolia is occupied by one of the world's largest gold ore deposits, called Oyu Tolgoi. Recently, investor interest in this country has increased, since most of the lands here have not yet been studied by geologists, which means that many minerals have still not been found.
Industry and mechanical engineering
The main industries in Mongolia's economy are textile, cloth, wool, leather, sheepskin and fur coats, meat processing, and construction materials. The country ranks second in the world in cashmere wool production.
Mechanical engineering appeared relatively recently, but has already managed to occupy a certain place in the economy of Mongolia. In 2006, the country's first trolleybus, produced by Mongolian engineers, went on line. Since 2009, the production of duobuses began - this is a vehicle that combines a bus and a trolleybus, which can be used both on routes with and without a contact network.
In 2012, Mongolian engineers assembled the country's first aircraft for the national carrier. In 2013, together with Belarus, we managed to agree on the joint production of tractors, and there are also enterprises producing hang-gliders and gyroplanes. Now there are plans to launch a company to produce trams on rubber wheels. This will be a fundamentally new type of public transport, which will be able to transport from 300 to 450 passengers at a time.
Agriculture
Briefly characterizing the economy of Mongolia, sufficient attention should be paid to agriculture. The country has a harsh continental climate, so the industry remains vulnerable to cold, drought and other natural disasters. The country has catastrophically little arable land, while about 80% of the territory is used for pastures.
The majority of the rural population is engaged in herding livestock. Mostly goats, sheep, camels, horses, and cattle are bred here. It is worth noting that this is the only modern state in the world in which nomadic livestock farming is still among the main sectors of the economy.
In terms of the number of livestock per capita, Mongolia ranks first in the world. Potatoes, wheat, watermelons, tomatoes, and various vegetables are also grown here. In general, there is little arable land, mainly concentrated around large cities in the north of the country.
Recently, most of the livestock has been concentrated in the hands of a few influential families. Since 1990, a foreign investment law has been in force, which allows citizens of other countries to own shares in various Mongolian enterprises. New laws were also passed regarding banking and taxation, debt obligations and loans.
Transport
The country has developed railway, road, air and water transport. The decision to build the railway was made in 1915. There are currently two main train routes in the country.
The Mongolian railway connects the country with China, it is the shortest route between Europe and Asia. The total length of roads is approaching two thousand kilometers.
The total length of waterways in the country is only about 600 kilometers. The Orkhon and Selenga rivers and Lake Khubsugol are considered navigable. Mongolia is the second country in the world by area (after Kazakhstan) that does not have direct access to any ocean.
But this fact did not prevent her from registering her own ship register in 2003. Today, approximately 400 ships sail under the Mongolian flag, and their number is rapidly increasing every month.
Car roads
Most of the roads here are dirt or gravel. Most paved roads are in the Ulaanbaatar area, leading to the Chinese and Russian borders.
The total length of roads in the country is almost 50 thousand kilometers. Of these, less than 10 thousand kilometers are paved roads. Currently, the country is actively building new highways and modernizing old ones.
Aviation
Air transport plays an important role in Mongolia's economic policy. There are 80 airports in the country, but only 11 have paved runways.
At the same time, the flight schedule is extremely unstable. Due to strong winds, flights are constantly being canceled or rescheduled. There are ten officially registered airlines in Mongolia, which operate 30 helicopters and approximately 60 fixed-wing aircraft.
There is an air taxi - a special means of public transport that transports passengers for a fixed fee. Air taxi differs from charter and other commercial flights in its simplicity. For example, there is no lengthy check-in procedure, and the waiting time for boarding is minimal. As a rule, it is enough to arrive at the airport a quarter of an hour before departure to go through all the shortened customs control and clearance procedures.
There are no flight attendants, kitchens or toilets on such aircraft. In most cases, small-capacity aircraft, as well as medium- and light-capacity helicopters, are used as such taxis.
Tourism
Mongolia is actively seeking to develop tourism. Quite a lot of hotels have been built in the country; more and more travelers want to come to this exotic country. There are two ski resorts, a large number of historical monuments of Buddhist monasteries, and untouched nature.
Of the foreign tourists, the majority of visitors to Mongolia come from Russia, China, South Korea, and the United States of America. You can also meet quite a lot of travelers from Germany, France and Australia.
There are approximately 650 tour operators in the country, ready to accommodate about one million tourists a year.
Export
Export plays an important role in the economic development of the state. The main goods that are sent abroad are molybdenum concentrate and copper, cashmere, fluorite, leather, wool, clothing, and meat. The country's interior is rich in mineral resources. In particular, there are many reserves of tin, iron ore, coal, uranium, copper, zinc, oil, phosphorus, molybdenum, gold, tungsten, and semi-precious stones.
Moreover, more than 80% of Mongolian exports are sent to China. In second place is Canada. From 1 to 4% of the export share falls on the countries of the European Union, Russia, and South Korea.
This situation began to change after 2012, when Mongolia was no longer satisfied with its export dependence on China. The government began to suspend certain cooperation projects with the Middle Kingdom. It is believed that one of the reasons for this was the attempts of a large Chinese aluminum company to obtain a controlling stake in one of the largest Mongolian coal suppliers to the territory of the People's Republic of China.
Import
First of all, industrial and industrial equipment, petroleum products, and consumer goods are imported into the country.
Approximately a third of imports come from the Russian Federation, with China firmly in second place. Also, goods from South Korea and Japan are supplied to Mongolia en masse.
Mongolia strives to constantly get rid of import dependence. In particular, it is planned to open the first oil refinery on the territory of the state in the near future.
Financial sector
The official currency of Mongolia is called the Mongolian tugrik. Currently, one Russian ruble can buy 38 tugriks. The country's own currency appeared only in 1925. Moreover, banknotes were originally made in the Soviet Union.
You can use credit cards in most banks, and there are exchange offices in all hotels in the country. Traveler's checks are also accepted as payment without any problems.
In 1991, the Mongolian Stock Exchange was opened.
Income of the population
As of 2017, the average salary in the country was 240 thousand tugriks per month, that is, less than six and a half thousand rubles.
At the same time, the country has introduced a minimum wage. The lowest hourly or monthly wage is set by law by the government. In 2017, the minimum wage was exactly 240 thousand tugriks per month. However, in Mongolia, only 7% of the population receives the minimum wage. Compared to 2013, the minimum wage increased by a quarter.
Economy of Mongolia
Economics - a quick overview:
Economic activity in Mongolia has traditionally been based on pastoralism and agriculture.
Mongolia has extensive mineral deposits.
The country produces copper, gold, coal, molybdenum, spar, uranium, tin, tungsten, and the mining and processing industries account for the majority of foreign direct investment and government revenue.
Severe winters and summer droughts in 2000-2002 led to massive livestock losses and zero or negative GDP growth.
From 2004-2008, GDP growth was around 9%, largely due to high copper prices and new gold discoveries.
In 2008, an inflation rate of almost 30% was recorded - the highest inflation rate in a decade.
In early 2009, the International Monetary Fund allocated $236 million under the stand-by program, and the country began to emerge from the crisis, although some instability remains in the banking sector.
In October 2009, the government passed long-awaited legislation to develop Oyu Tolgoi, one of the world's largest copper deposits.
Mongolia's economy remains heavily dependent on its neighbors. Mongolia buys 95% of its oil and a significant amount of electricity from Russia, leaving it dependent on rising prices. Trade with China accounts for more than half of Mongolia's total foreign trade—China receives about two-thirds of Mongolia's exports.
Remittances from Mongolians working abroad are significant but have fallen due to the economic crisis; Money laundering is a growing concern.
Mongolia joined the World Trade Organization in 1997 and has sought to expand its participation in regional economic and trade regimes.
US$3,100 (2009)
4030 million kWh (2009)
5,100 bbl/day (2009)
5,300 barrels/day (2009)
— $228,700,000 (2009)
Country's place in the world: 93
- $710 million (2008)
Export:
$1902 million (2009)
Country's place in the world: 130
$2539 million (2008)
Export - goods:
copper, clothing, livestock, animal products, cashmere, wool, hides, spar, non-ferrous metals, coal
Export - partners:
China 78.52%, Canada 9.46%, Russia 3.02% (2009)
Import:
$2,131 million (2009)
Country's place in the world: 150
$3224 million (2008)
Import - goods:
machinery and equipment, fuel, automobiles, food, industrial consumer goods, chemicals, construction materials, sugar, tea
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