Politics and Economics of Mongolia's Privatization Program

Abstract

While decisions on the scope and speed of privatization remain central to the politics of most of the ex-Soviet bloc, in Mongolia such decisions are now largely moot. Despite difficulties in implementing many aspects of the reforms introduced after the elections of 1990, Mongolia proceeded with remarkable swiftness to privatize state assets. In private shares of capital, Mongolia resembles Japan or Western Europe more than its erstwhile socialist comrades. This paper examines the remarkable story of Mongolian privatization, placing it in the context of the sweeping program of political and economic reforms implemented since 1990. Looking back to 1990, one would hardly have predicted fast progress on the divisive issue of privatization. The Mongolian Constitution had state ownership as its fulcrum until 1992. The lurking influence of the USSR suggested restraint on reforms, and the ruling Mongolian People's Revolutionary Party (MPRP) had won the first democratic elections with a program embodying scientific socialism and dialectical materialism. The notion of privatization was just entering the political vocabulary; private ownership of even the smallest assets had only just become a reality. However, in a move interpreted variously as reflecting its disarray or its statesmanship, the MPRP invited members of the new parties into a coalition government. The most influential of these, the National Progress Party (NPP), was formed around a group of young economists whose leader, Ganbold, became first deputy prime minister in charge of economics. A month after the new government's