A Development Perspective on Mongolia

Abstract

After more than 70 years with a highly dependent, centrally commanded economy, Mongolia in the past decade has commenced a transition to a market-based one. There have been economic successes, but that success has not been universal. In those areas commonly linked to development, there has been limited progress and, in many cases, a sharp decline in the living standards of and social services for Mongolia's population. This article is a case study of the macroeconomic policies and structural adjustments highlighted in the past decade's transformation effort. Such policies as the privatization of state assets, price adjustments, and reform of the financial sector have increased income inequalities. These policies have led to an increasing propensity to save and invest, thereby contributing to income growth. However, poverty and unemployment have increased in the process, bringing substantial suffering to the populace. Education and medical care are now beyond the reach of many citizens, especially those living in the rural areas. I conclude with a few brief observations regarding policies that might reverse this situation. These suggestions with respect to the white, green, and brown revolutions offer possibilities for economic and social development. In the long run, the exploitation of Mongolia's rich mineral resources and the export of value-added products made from them, in combination with the development of ecotourism, will place the country on a higher level of development. Mongolia, a sparsely populated Northeast Asian state that is one of the largest landlocked countries in the world, lies between Russia and the People's Republic of China (PRC). Its total area of 1.6 million sq kms encompasses an area greater than that of Britain, France, Germany, and Italy combined; four times the size of Japan, it is the fifth largest country in Asia.