Mongolia economy. Fundamentals of Economics
Today, the Mongolian 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 will be one of the highest in the near future. In particular, the World Bank experts believe that over the next ten years, economic indicators will grow by an average of 15% every year.
Main Industries
The economy of Mongolia is concentrated in several industries, these are agriculture and mining. This is even though most people live in cities. A significant part of the country's industrial production is coal, copper, tin, molybdenum, gold and tungsten.
At the same time, 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 line. In recent years, this figure has been declining rapidly.
In the structure of the GDP of the Mongolian economy, the largest part is occupied by mining, accounting for almost 20%. Forestry, agriculture and fishing account for approximately 17%, with over 10% coming from retail, wholesale and transport. Manufacturing, real estate, communications and information technologies also have their share in GDP.
Most of the able-bodied population is concentrated in agriculture (more than 40%), about a third works in the service sector, almost 15% in trade. The rest of the people work in production, in the private sector, in the mining industry.
Economy type
To understand the financial structure of this state, it is important to understand what kind of economy is in Mongolia. It is in the process of transition from one socio-economic state to another, while occupying some intermediate position between developing and economically developed countries. Currently, Mongolia belongs to the countries with economies in transition.
At the same time, in the course of the transformation process, the structure of production, property relations, and management tools are transformed.
The Mongolian economy 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 as early as the 1980s. Perestroika, which began in the Soviet Union, only accelerated this process. Large-scale socio-economic transformations began to be carried out after 1991.
Mongolia is a country with a transitional economy that has been actively developing in recent years. Here are all the main criteria for a state that is at a transitional stage of its socio-economic development. 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, there are three large deposits of brown coal in the country, 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 the amount of reserves, have been successfully developed for a long time.
In the Treasure Mountain, copper-molybdenum ore is mined. The discovery of this mineral led to the construction of a large mining and processing plant, around which a whole city grew. Today, almost one hundred thousand people live in Erdenet.
An important place in the economic development of Mongolia is occupied by one of the world's largest gold ore deposits, which is called Oyu Tolgoi. Recently, investors' interest in this country has increased, since most of the land here has not yet been studied by geologists, which means that many minerals have not yet been found.
Industry and engineering
The main ones in the economy of Mongolia are textile, cloth, woolen, leather, sheepskin coat, meat processing, building materials production. The country ranks second in the world in the production of cashmere wool.
Mechanical engineering appeared relatively recently, but has already managed to take a certain place in the economy of Mongolia. In the country in 2006, the first trolleybus produced by Mongolian engineers entered the line. Since 2009, the production of duobuses has begun - 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 first aircraft in the country for the national carrier. In 2013, together with Belarus, it was possible to agree on the joint production of tractors, enterprises also operate for the production of hang-gliders and gyroplanes. Now it is planned to launch a company for the production of trams on rubber wheels. It will be a fundamentally new type of public transport, which will be able to carry 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. There is catastrophically little arable land in the country, while about 80% of the territories are used for pastures.
Most of the rural population is engaged in livestock grazing. Mostly goats, sheep, camels, horses, cattle are bred here. It is worth noting that this is the only modern state in the world in which nomadic animal husbandry 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, various vegetables are also grown here. In general, there is little arable land, mainly concentrated around large cities in the north of the country.
In recent times, most of the livestock has been concentrated in the hands of a few influential families. Since 1990, a law on foreign investment has been in force, which allows citizens of other states to own shares in various Mongolian enterprises. New laws were also adopted regarding banking and taxation, debt and credit.
Transport
The country has developed rail, road, air and water transport. The decision to build the railway was made in 1915. Now there are two main highways for trains 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, Lake Khubsugul are considered navigable. Mongolia is the second largest country in the world (after Kazakhstan) that has no direct access to any ocean.
But this fact did not prevent her from registering her own shipping register in 2003. Today, about 400 ships sail under the Mongolian flag, and their number is growing rapidly every month.
Car roads
Most of the roads here are unpaved or gravel. Most of the paved roads are in the Ulaanbaatar area and lead 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 the policy of Mongolia in the economy. In total, there are 80 airports in the country, while only 11 have paved runways.
At the same time, the flight schedule is extremely unstable. Due to strong winds, flights are constantly canceled or rescheduled. There are ten officially registered airlines in Mongolia, which own 30 helicopters and approximately 60 airplanes.
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, 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 abbreviated customs control and clearance procedures.
There are no stewardesses, kitchens or toilets on such aircraft. In most cases, small aircraft, as well as medium and light-duty helicopters, are used as such taxis.
Tourism
Mongolia is actively seeking to develop tourism. A lot of hotels have been built in the country, and there are more and more travelers who want to come to this exotic country. There are two ski resorts here, in addition to a large number of historical monuments of Buddhist monasteries, untouched nature.
From foreign tourists, most of the guests come to Mongolia 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 about 650 tour operators in the country, ready to receive 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 bowels of the country are rich in mineral resources. In particular, there are many reserves of tin, iron ore, coal, uranium, copper, zinc, oil, phosphorus, molybdenum, gold, tungsten, and semiprecious stones.
At the same time, more than 80% of Mongolian exports go to China. In second place is Canada. From 1 to 4% of the share of exports falls on the countries of the European Union, Russia, South Korea.
This situation began to change after 2012, when Mongolia ceased to be satisfied with export dependence on China. The government began to suspend individual projects of cooperation with China. It is believed that one of the reasons for this was the attempt by 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, oil products, and consumer goods are imported into the country.
About a third of imports come from the Russian Federation, with China firmly in second place. Also massively deliver goods to Mongolia from South Korea and Japan.
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 monetary unit 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, there are exchange points in all hotels in the country. Traveler's checks are also accepted as payment here without any problems.
In 1991, the Mongolian Stock Exchange was opened.
Population income
In 2017, the average salary in the country amounted to 240 thousand tugriks per month, that is, less than six and a half thousand rubles.
At the same time, the country introduced a minimum wage. The lowest hourly or monthly wages are set by law by the government. In 2017, the minimum wage amounted to 240 thousand tugriks per month. At the same time, only 7% of the population in Mongolia receives the minimum wage. Compared to 2013, the minimum wage has increased by a quarter.
Economy of Mongolia
Economics at a Glance:
Economic activity in Mongolia has traditionally been based on pastoralism and agriculture.
Mongolia has extensive mineral deposits.
The country conducts copper, gold, coal, molybdenum, spar, uranium, tin, tungsten, the mining and processing industry accounts for most of the foreign direct investment and government revenue.
Severe winters and summer droughts in 2000-2002 led to massive loss of livestock and zero or negative GDP growth.
In 2004-2008, GDP growth was around 9%, largely due to high copper prices and the discovery of new gold.
In 2008, an inflation rate of nearly 30% was recorded, the highest inflation rate in a decade.
In early 2009, the International Monetary Fund provided $236 million in a 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 is still heavily dependent on its neighbors. Mongolia buys 95% of its oil and a significant amount of electricity from Russia, leaving it vulnerable to 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 is seeking to expand its participation in regional economic and trade regimes.
$3,100 (2009)
4030 million kWh (2009)
5100 bbl/day (2009)
5300 bbl/day (2009)
- $228,700,000 (2009)
Place of the country in the world: 93
- $710 million (2008)
Export:
$1902 million (2009)
Place of the country 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)
Place of the country in the world: 150
$3224 million (2008)
Import - goods:
machinery and equipment, fuels, automobiles, foodstuffs, industrial consumer goods, chemicals, building materials, sugar, tea
For 1970-2018 Mongolia's GDP at current prices increased by $12.8 billion (65.6 times) to $13.0 billion; the change was $0.29 billion due to population growth of $1.8 million, and $12.5 billion due to GDP per capita growth of $4,012.0. The average annual GDP growth of Mongolia was at the level of 0.27 billion dollars or 9.1%. The average annual GDP growth of Mongolia at constant prices was at the level of 5.0%. The share in the world increased by 0.0094%. The share in Asia increased by 0.0024%. The minimum of GDP was in 1970 ($0.20 billion). The maximum GDP was in 2018 (13.0 billion dollars).
For the period 1970-2018. GDP per capita in Mongolia increased by $4,012.0 (26.9 times) to $4,167.0. The average annual increase in GDP per capita in current prices was $83.6 or 7.1%.
The change in Mongolia's GDP is described by a linear correlation-regression model: y=0.23x-461.8 , where y is the estimated value of Mongolia's GDP, x is a year. Correlation coefficient = 0.815. Coefficient of determination = 0.665.
Mongolian GDP, 1970
Mongolian GDP in 1970 it was equal to 0.20 billion dollars, ranked 143rd in the world and was at the level of the GDP of Mauritius (0.21 billion dollars), the GDP of Aruba (0.20 billion dollars). The share of GDP of Mongolia in the world was 0.0058%.
In 1970 it was equal to 155.0 dollars, ranked 156th in the world and was at the level of GDP per capita in Comoros (163.0 dollars), GDP per capita in Madagascar (160.0 dollars), GDP per capita in Palestine (158.0 dollars), GDP per capita in Afghanistan ($157.0), GDP per capita in the Central African Republic ($151.0), GDP per capita in Uganda ($151.0), GDP per capita in Togo ($145.0). The GDP per capita in Mongolia was less than the GDP per capita in the world ($924.0) by $769.0.
Comparison of the GDP of Mongolia and neighbors in 1970. Mongolia's GDP was less than China's ($92.6 billion) by 99.8%. Mongolia's per capita GDP was greater than China's per capita GDP ($112.0) by 38.4%.
Comparison of Mongolian GDP and leaders in 1970. Mongolia's GDP was 100% less than the US GDP ($1,073.3 billion), the Soviet Union's GDP ($433.4 billion) by 100%, Germany's GDP ($215.8 billion) by 99.9%, Japan's GDP ($212.6 billion dollars) by 99.9%, French GDP (148.5 billion dollars) by 99.9%. GDP per capita in Mongolia was 97% less than GDP per capita in the United States ($5,121.0), GDP per capita in France ($2,853.0) by 94.6%, GDP per capita in Germany ($2,747.0) ) by 94.4%, GDP per capita in Japan (2,026.0 dollars) by 92.3%, GDP per capita in the USSR (1,788.0 dollars) by 91.3%.
Mongolian GDP potential in 1970. With GDP per capita at the same level as US GDP per capita ($5,121.0), Mongolia's GDP would be $6.5 billion, 33.0 times the actual level. With GDP per capita at the same level as the world's GDP per capita ($924.0), Mongolia's GDP would be $1.2 billion, which is 6.0 times the actual level. With GDP per capita at the same level as East Asia's GDP per capita ($331.0), Mongolia's GDP would be $0.42 billion, 2.1 times the actual level. With GDP per capita at the same level as Asia's GDP per capita ($247.0), Mongolia's GDP would be $0.32 billion, 59.4% more than the actual level.
GDP of Mongolia, 2018
Mongolian GDP in 2018 was 13.0 billion dollars, ranked 136th in the world and was at the level of GDP of Madagascar (13.9 billion dollars), GDP of Brunei (13.6 billion dollars), GDP of Equatorial Guinea (13.3 billion dollars), GDP of Nicaragua (13.1 billion dollars), GDP of Niger (12.8 billion dollars), GDP of Armenia (12.4 billion dollars), GDP of the Bahamas (12.4 billion dollars). The share of Mongolia's GDP in the world was 0.015%.
GDP per capita in Mongolia in 2018 was equal to 4 167.0 dollars, ranked 129th in the world and was at the level of GDP per capita in Jordan (4 264.0 dollars), GDP per capita in Sri Lanka (4 245.0 dollars), GDP per capita in Armenia ( $4,237.0), GDP per capita in Samoa ($4,216.0), GDP per capita in Algeria ($4,136.0), GDP per capita in Tuvalu ($4,079.0), GDP per capita in El Salvador (4,064.0 dollars), GDP per capita in the Marshall Islands (4 029.0 dollars), GDP per capita in Indonesia (3 906.0 dollars). The GDP per capita in Mongolia was less than the GDP per capita in the world ($11,230.0) by $7,063.0.
Comparison of GDP of Mongolia and neighbors in 2018. Mongolia's GDP was less than China's GDP Russia's GDP ($1,660.5 billion) by 99.2%. GDP per capita in Mongolia was less than GDP per capita in Russia ($11,534.0) by 63.9%, GDP per capita in China ($9,617.0) by 56.7%.
Comparison of Mongolian GDP and leaders in 2018. Mongolia's GDP was 99.9% less than that of the United States ($20,580.2 billion), China's GDP ($13,608.2 billion) by 99.9%, Japan's GDP ($4,971.3 billion) by 99.7%, and Germany's GDP (3 949.5 billion dollars) by 99.7%, UK GDP (2 855.3 billion dollars) by 99.5%. GDP per capita in Mongolia was 93.4% less than GDP per capita in the US ($62,981.0), GDP per capita in Germany ($47,993.0) by 91.3%, GDP per capita in the UK ($42,889.0) ) by 90.3%, GDP per capita in Japan ($39,087.0) by 89.3%, GDP per capita in China ($9,617.0) by 56.7%.
Mongolian GDP potential in 2018. With GDP per capita at the same level as US GDP per capita ($62,981.0), Mongolia's GDP would be $196.6 billion, 15.1 times the actual level. With GDP per capita at the same level as East Asia's GDP per capita ($12,914.0), Mongolia's GDP would be $40.3 billion, 3.1 times the actual level. With GDP per capita at the same level as the GDP per capita of Russia ($11,534.0), the best neighbor, Mongolia's GDP would be $36.0 billion, which is 2.8 times the actual level. With GDP per capita at the same level as the world's GDP per capita ($11,230.0), Mongolia's GDP would be $35.1 billion, which is 2.7 times the actual level. With GDP per capita at the same level as Asia's GDP per capita ($7,006.0), Mongolia's GDP would be $21.9 billion, 68.1% more than the actual level.
year | GDP, billion dollars | GDP per capita, dollars | GDP, billion dollars | GDP growth, % | share of Mongolia, % | ||
---|---|---|---|---|---|---|---|
current prices | constant prices 1970 | in the world | in Asia | in East Asia | |||
1970 | 0.20 | 155.0 | 0.20 | 0.0058 | 0.038 | 0.060 | |
1971 | 0.22 | 166.0 | 0.21 | 4.7 | 0.0058 | 0.038 | 0.059 |
1972 | 0.24 | 174.0 | 0.21 | 3.6 | 0.0054 | 0.034 | 0.051 |
1973 | 0.27 | 194.0 | 0.23 | 8.9 | 0.0051 | 0.030 | 0.044 |
1974 | 0.31 | 214.0 | 0.24 | 4.2 | 0.0052 | 0.028 | 0.045 |
1975 | 0.36 | 242.0 | 0.26 | 6.5 | 0.0054 | 0.030 | 0.048 |
1976 | 0.39 | 258.0 | 0.27 | 3.9 | 0.0054 | 0.029 | 0.048 |
1977 | 0.45 | 288.0 | 0.29 | 7.8 | 0.0055 | 0.028 | 0.046 |
1978 | 0.52 | 322.0 | 0.31 | 7.5 | 0.0054 | 0.026 | 0.039 |
1979 | 0.58 | 355.0 | 0.33 | 4.3 | 0.0053 | 0.026 | 0.040 |
1980 | 0.68 | 401.0 | 0.35 | 6.4 | 0.0055 | 0.027 | 0.043 |
1981 | 0.80 | 464.0 | 0.38 | 8.4 | 0.0064 | 0.029 | 0.048 |
1982 | 0.92 | 520.0 | 0.41 | 8.3 | 0.0074 | 0.035 | 0.058 |
1983 | 1.0 | 557.0 | 0.43 | 5.8 | 0.0079 | 0.036 | 0.059 |
1984 | 1.1 | 596.0 | 0.46 | 5.9 | 0.0084 | 0.038 | 0.061 |
1985 | 1.2 | 633.0 | 0.48 | 5.7 | 0.0090 | 0.042 | 0.063 |
1986 | 1.4 | 687.0 | 0.53 | 9.4 | 0.0087 | 0.038 | 0.052 |
1987 | 1.4 | 708.0 | 0.55 | 3.5 | 0.0081 | 0.034 | 0.045 |
1988 | 1.6 | 750.0 | 0.58 | 5.1 | 0.0079 | 0.031 | 0.040 |
1989 | 1.7 | 792.0 | 0.60 | 4.2 | 0.0082 | 0.032 | 0.042 |
1990 | 1.7 | 785.0 | 0.58 | -2.5 | 0.0075 | 0.031 | 0.042 |
1991 | 1.6 | 726.0 | 0.53 | -9.2 | 0.0067 | 0.026 | 0.035 |
1992 | 1.5 | 664.0 | 0.48 | -9.5 | 0.0058 | 0.022 | 0.029 |
1993 | 1.5 | 654.0 | 0.47 | -3.0 | 0.0056 | 0.020 | 0.025 |
1994 | 1.5 | 678.0 | 0.48 | 2.3 | 0.0055 | 0.019 | 0.024 |
1995 | 1.7 | 730.0 | 0.51 | 6.3 | 0.0054 | 0.018 | 0.023 |
1996 | 1.6 | 691.0 | 0.52 | 2.4 | 0.0050 | 0.018 | 0.024 |
1997 | 1.4 | 613.0 | 0.54 | 4.0 | 0.0045 | 0.016 | 0.022 |
1998 | 1.3 | 560.0 | 0.56 | 3.5 | 0.0042 | 0.017 | 0.022 |
1999 | 1.2 | 519.0 | 0.58 | 3.2 | 0.0038 | 0.014 | 0.019 |
2000 | 1.3 | 550.0 | 0.58 | 1.1 | 0.0039 | 0.014 | 0.018 |
2001 | 1.5 | 608.0 | 0.60 | 3.0 | 0.0044 | 0.017 | 0.022 |
2002 | 1.6 | 663.0 | 0.63 | 4.7 | 0.0047 | 0.018 | 0.024 |
2003 | 1.8 | 749.0 | 0.67 | 7.0 | 0.0047 | 0.018 | 0.025 |
2004 | 2.3 | 925.0 | 0.74 | 10.6 | 0.0053 | 0.020 | 0.029 |
2005 | 2.9 | 1 158.0 | 0.80 | 7.3 | 0.0061 | 0.024 | 0.034 |
2006 | 4.0 | 1 548.0 | 0.86 | 8.6 | 0.0077 | 0.029 | 0.044 |
2007 | 4.9 | 1 895.0 | 0.95 | 10.2 | 0.0084 | 0.032 | 0.050 |
2008 | 6.5 | 2 481.0 | 1.0 | 8.9 | 0.010 | 0.037 | 0.057 |
2009 | 5.3 | 1 992.0 | 1.0 | -1.3 | 0.0088 | 0.030 | 0.045 |
2010 | 7.2 | 2 650.0 | 1.1 | 6.4 | 0.011 | 0.034 | 0.053 |
2011 | 10.4 | 3 770.0 | 1.3 | 17.3 | 0.014 | 0.043 | 0.066 |
2012 | 12.3 | 4 368.0 | 1.4 | 12.3 | 0.016 | 0.048 | 0.073 |
2013 | 12.6 | 4 385.0 | 1.6 | 11.6 | 0.016 | 0.048 | 0.074 |
2014 | 12.2 | 4 182.0 | 1.7 | 7.9 | 0.015 | 0.045 | 0.069 |
2015 | 11.7 | 3 947.0 | 1.8 | 2.4 | 0.016 | 0.044 | 0.066 |
2016 | 11.2 | 3 695.0 | 1.8 | 2.0 | 0.015 | 0.040 | 0.060 |
2017 | 11.4 | 3 717.0 | 1.9 | 5.2 | 0.014 | 0.039 | 0.058 |
2018 | 13.0 | 4 167.0 | 2.0 | 6.7 | 0.015 | 0.041 | 0.061 |
picture. Mongolian GDP, 1970-2018
picture. GDP per capita in Mongolia, 1970-2018
picture. GDP growth in Mongolia, 1970-2018
Mongolian GDP by expenditure
Indicator | 1970 | 1980 | 1990 | 2000 | 2010 | 2018 | |
---|---|---|---|---|---|---|---|
Consumer spending | 76.0 | 79.6 | 90.0 | 91.3 | 67.9 | 59.1 | |
including | Household spending | 57.2 | 60.5 | 68.3 | 76.9 | 55.2 | 47.5 |
Government spending | 18.8 | 19.1 | 21.7 | 14.3 | 12.7 | 11.6 | |
Agriculture and animal husbandry have historically been considered the basis. The lands of this state, located in the southeastern part of Asia, are rich in vast deposits of natural resources. The Mongols mine copper, coal, tin and gold. The mining industry in Mongolia accounts for a significant state-economic sector, but the extraction of raw materials is not the only industry in which the population of the country is involved.
History of the economy
The history of industry in Mongolia dates back to 1924 - the year of the proclamation of the Mongolian People's Republic. Before this period, there was no industry, no such thing as a working class. All that the population was engaged in was the processing of livestock products, including the dressing of leather, sheepskins, felt rolling, blacksmithing and carpentry. Such types of production had handicraft features and were aimed at serving the on-farm needs of the local population. Manual production was represented by enterprises for the primary processing of wool and leather, carpentry, locksmith, blacksmith and other workshops.
The only industry in Mongolia at that time was the coal mines in the Nalaykha tract. In some regions of the country, foreigners were illegally engaged in the extraction of gold and precious metals.
In the first half of the last century, the Asian state was completely dependent on the import of manufactured goods from abroad. That is why one of the primary tasks of the government of the republic was the creation of its own industrial enterprises. Two problems stood in the way of the young and economically immature state: the lack of qualified personnel and material resources. The Soviet Union provided assistance in resolving these issues.
Period of industrial development
At the first stages, the formation of the light and food industries of Mongolia began. The young republic of that time laid the foundation for the modern energy block of the economy. Back in the 1920s, the widespread construction of processing enterprises began. In 1933, brick, sawmill and mechanical factories began to work in Ulaanbaatar, the first power station was opened.
It is rather difficult to talk briefly about the industry of Mongolia. The progressive development of the light and food sectors of the economy needed a fuel and energy industry that could meet the pace of production growth. A certain leap in development was made by the coal industry of Mongolia. Most of the coal mines in Nalaikha were expanded and mechanized, and the development of new deposits began in the Under-Khane, Yugotszyr, Sain-Shande regions. The Mongolian coal industry to a greater extent met the domestic demand for solid fuels. In particular, local coal was used at the unified power plant of Ulaanbaatar in 1939 and small power plants.
In the same period, another specialization of Mongolian industry arose - metalworking enterprises, including an iron foundry. One by one, printing and paper mills, enterprises specializing in the manufacture of building materials, gold processing, etc. were built.
Mongolia today
After the collapse of the USSR, assistance from the Soviet republics, which accounted for almost a third of external GDP, ceased to arrive, which led to a protracted decline in the Mongolian economy. Industries were in need of fundamental economic reforms.
The government of the country has adopted a new course in the development of the country, aimed at building a market economy. In the course of the reforms, a number of radical decisions were made in most areas of the national economy. The state has ceased to control the pricing process. Through the liberalization of domestic and foreign economic activity, attempts were made to rebuild the banking system, the energy sector, developed and adopted programs for the privatization of land and the implementation of measures to attract foreign investment. Mongolia to participate in international tenders.
However, the reform process was put on hold as a result of the resistance of the communist movement and the political instability that arose due to the frequent change of governments.
The peak in the economic crisis came in 1996 after a series of natural disasters and the fall in world prices for copper and cashmere. But despite this, the next 1997 was recognized as the year of the country's economic growth. In the same year, Mongolia became a full member of the WTO. And although Russia's decision to ban the export of oil and oil products in 1999 had the most adverse effect on the state of the Mongolian economy, the country continued to move forward with confident steps.
Since 1999, by decision of the WTO, this young and promising state has been annually provided with financial assistance by partner countries: China, Russia, South Korea, and Japan. And although the economic indicators and the degree of industrial development in Mongolia can hardly be called advanced, many experts consider the economy of this country to be the most progressive in the world. In their opinion, the potential of the state is huge, given the reserves of mineral raw materials, the development of which is still at an early stage.
The basis of industry: natural and labor resources
Despite the many deposits of valuable mineral raw materials, their development is not carried out to the full extent due to numerous restrictions. In Mongolia, brown coal is being mined at four deposits, and in the southern part of the country, in the region of the Taban-Tolgoi mountain range, coal deposits have been discovered. According to preliminary data, geological reserves amount to billions of tons. Small tungsten subsoils and areas rich in fluorspar are being actively developed. The discovery of copper-molybdenum ores on Mount Erdenetiin-ovoo served as the basis for the creation of a mining and processing plant, around which the industrial town of Erdenet is located.
The oil industry of Mongolia has been actively developing since the middle of the last century. One of the main enterprises in this industry is an oil refinery in Sain-Shanda, a city located near the border with China.
Massive deposits of phosphorites were discovered near Lake Khubsugul. However, today the development of the deposit was suspended, not even allowing it to develop to the full extent due to environmental hazards. It is known about the accumulation of zeolites in the bowels of the earth - Mongolia carried out the search for this material jointly with the USSR. However, today the extraction of these minerals of the aluminosilicate group, used in agriculture for biostimulation processes and adsorption, is practically not carried out due to lack of funding.
The development of any Mongolia depends on labor resources. The population as of 2018 is 3.119 million people, of which about a third are citizens of working age. Part of the population (about 40%) is employed in agriculture, in the industry of Mongolia - about 20%. The rest of the population works in the service sector, is engaged in private business and housekeeping. The unemployment rate is at 9%.
Food production
Briefly about the industry of Mongolia, which provides the needs of the population for food, we can say this: this sector of the economy accounts for about 40% of the total production. In this industry, the production of dairy and meat products is actively developing. Numerous oil refineries and separator points have been built in small settlements (aimags). It is worth noting that just a few decades ago, Mongolia could not count on the production of commercial butter. Today it is one of the major export positions.
The main ingredient for the food industry in Mongolia is milk. A dairy plant operates in Ulaanbaatar, which processes dozens of tons of milk and cream per day. All production processes at this enterprise have long been automated and mechanized. The capital dairy plant produces pasteurized dairy and sour-milk products, butter, cottage cheese, sweet glazed curds, ice cream. This enterprise is the leading food industry plant in Mongolia.
Not far from Ulaanbaatar, there is a large meat processing plant equipped with modern technology, thanks to which the plant's workshops demonstrate high production results. In the complex of the meat processing plant there are shops for the processing of meat products, departments for the production of semi-finished products, sausages, canned food. The predominant part of the goods of the meat processing industry is exported to other countries.
In addition to meat and dairy production, the food industry of Mongolia is represented by butter, confectionery, bakery, liquor, fish and other industries. A few years ago, a new direction in the food industry, flour milling, began to develop rapidly in the republic. Today, the country meets the needs of its citizens in flour at the expense of the products of national producers. In addition to the mill plant in Ulaanbaatar, which produces more than 30,000 tons of flour annually, there are a number of mechanized flour mills in aimaks.
Industrial plant in Ulaanbaatar
Among the light industry plants in Mongolia, it is necessary first of all to note the industrial plant in the capital - this is one of the largest enterprises engaged in the processing of agricultural products. The industrial complex in Ulaanbaatar was built in 1934. Subsequently, this enterprise began to be called the forge of professional industrial personnel from the times of socialism. The industrial complex consists of a complex of plants and factories equipped with modern equipment. There are wool-washing, cloth, worsted, felting, shoe, saddlery and textile workshops. The Ulaanbaatar industrial complex also includes a chevrovy, chrome, sheepskin coat, leather and other factories in its structure. The main products manufactured by the plant are:
- various woolen fabrics;
- felt;
- drape;
- cloth;
- shoes for all seasons;
- felt boots;
- camel wool blankets;
- bags;
- outerwear.
The plant's products are in demand not only within the country, they are exported to other countries. The industrial complex strives to expand the production sphere. With the development of this holding, its individual workshops have long acquired the status of independent enterprises.
Progress in heavy industries
Over the past years, the country has seen a positive trend in the development of energy, coal, oil, metalworking, mining, construction, woodworking and other production areas. Average annual growth rates exceed similar figures in other former socialist republics. Mongolia's industrial growth rate surprises many economic experts, as the country, not so long ago considered the most backward, is steadily moving closer to the level of advanced powers.
In order to develop the main sectors of the national economy, the Mongols are striving to bring industrial production to a new level, corresponding to the world average. The government of the country pays special attention to the creation and establishment of its own chemical, pharmaceutical, biological production, which plays a huge role in expanding the main sector of the economy - livestock and agriculture in Mongolia. In industry, as already noted, approximately 20% of the able-bodied population is involved, while almost 40% of the able-bodied citizens are engaged in livestock breeding, agriculture, and growing crops.
Industrialization of Mongolian cities and development of the coal industry
Briefly about the specializations and industries of Mongolia, which form the basis of the fuel and energy block of the country's economy, we can say that they are fundamental in the development of the national economy. republic occupies the main place in this segment. Today, brown and black coal is being mined in 13 large deposits in Mongolia. The most demanded product for export is coking and high-grade coal, which is mined in the Nalaykha region near Ulaanbaatar.
The coal basin of certain regions of Mongolia, in particular in the aimaks of Uverkhangay and Sukhe-Bator, the operating mines fully meet the demand for solid fuel not only in their own settlements, but also in some neighboring ones. Not so long ago, new coal mines were put into operation and old enterprises were equipped with new equipment. This step naturally led to an increase in average annual production rates by more than 10-15%.
Simultaneously with coal deposits, during the development of deposits, natural reserves of ores, asbestos, limestone and other valuable raw materials are often discovered. Today, Darkhan-Uul is considered one of the rapidly developing industrial centers. Here, within the Sharyn-Gol coal basin, an industrial and energy complex is being built, which will provide coal to all spheres of the national economy and the needs of the population. That is why the Mongols call the city of Darkhan-Uul "the flower of friendship." In the construction of this complex, the countries of the former USSR (Russia, Kazakhstan), China, Japan, Canada provide significant assistance to the republic. The main objects of the complex should be several large coal mining enterprises, a railway transport hub, a high-voltage power line and an elevator. Today, the process of the birth of another economic and cultural center of Mongolia is taking place here.
Oil production, electricity generation
As the fuel base and industrial sectors as a whole grow, the production of electric energy has to be brought to a new level. A few decades ago, electricity was not even heard in remote regions. Today, the need for electrification is explained not only by the household needs of the population, but primarily by the need for mechanization and automation of production in the country and an increase in the performance of finished products. Local power substations operate in aimag centers.
Unlike other industrial sectors, oil refining is a relatively young specialization in the industry of Mongolia. The industry is still in its infancy, but at the same time, the country produces half of the gasoline for its own needs, and imports the rest.
The only major oil refining center is located in the Eastern Gobi. Not so long ago, a young city appeared here - Dzunbayan, which also houses infrastructure and cultural and community facilities. The Eastern Gobi satisfies almost half of Mongolia's fuel needs.
Due to the expansion of the manufacturing and manufacturing industries in Mongolia, electricity costs are increasing every year, which prompts the government to consider building new thermal power plants.
Mining of mineral ores and metals
The mining industry provides Mongolia with:
- gold;
- manganese;
- tungsten;
- magnetic iron ore;
- lead ores;
- rock crystal;
- turquoise and other non-ferrous, precious metals;
- salt.
Mining and processing enterprises are being built near the places of large deposits. Mongolia exports tungsten and certain types of non-ferrous metals to other countries. Ferrous metallurgy in Mongolia is represented by a mechanical processing plant with an iron foundry in Ulaanbaatar. Agricultural equipment, hand tools, and small machinery are produced here for domestic and export sales.
Marble, limestone, asbestos, gypsum, and mineral paints are mined in the republic. The extraction of raw materials of this type allows the development of the industrial sector of building materials. Over the past few years, several dozen enterprises have been put into operation, including a house-building plant in Sukhbaatar. They are engaged in the production of lime, cement, brick, slate and other building products. Special attention deserves a large-panel housing construction plant in the capital of Mongolia, a glass plant in Nalaikha, reinforced concrete and brick factories in Ulaanbaatar. Complex mechanized technologies are used in the workshops. All enterprises are equipped with modern technology.
The production of building materials and their sale to the population at an affordable price is an important aspect for a people who in the recent past were considered nomadic. The transition of the Mongols to settled life is facilitated by the large-scale construction of comfortable houses, infrastructure facilities, and the development of a public transport network in cities and aimaks.
agricultural holding
The Ministry of Agriculture and Light Industry of Mongolia is doing everything to support the agricultural sector of the economy and create the most favorable conditions for its development. Agriculture throughout the history of the existence of this state was at the heart of its economy. In the context of the transition to a market model, the importance of the agricultural sector has not decreased. Almost half of the labor reserve of Mongolia is involved in it, although 50-60 years ago this figure reached 80%. Agriculture provides more than 40% of the total GDP. The Mongols rank third in the world in terms of livestock per capita behind Australia and New Zealand.
Almost until the middle of the last century, while industry was undergoing the process of formation and transformation into an independent sphere, the agricultural sector remained the only production sector. Back in those days, finished products were exported, which made it possible to receive almost 60% of the national income. Over time, this share has been declining and today is about 35-40%, with more than half of export products being raw materials.
The most important economic indicators in this country depend on the level and pace of agricultural development. In particular, the cost of agricultural raw materials is the main part of the cost of production of light and food industry goods. The Ministry of Agriculture of Mongolia is constantly working on creating new concepts and methods that would make it possible to minimize costs and increase the productivity of finished products.
Pasture animal husbandry is the predominant type of economic activity that the Mongols are engaged in. According to some reports, there are 12 heads of cattle per person. In some aimags, livestock is a conditional monetary unit in transactions of a material nature. Unlike animal husbandry, agriculture in modern Mongolia plays a secondary role.
Completion
The development of industry led to the formation of the working class on the model of the proletariat of the USSR. The participation of the Soviet Union played an important role in the process of training specialized workers. Some of the Mongols gained experience and knowledge by working at their enterprises under the supervision of sent Soviet masters. They were trained in special circles, technical sections, training centers. Others were educated directly in the USSR. Thus, Mongolia is an example of a nationwide desire for the economic prosperity of their country through the development of industry, the rationalization of production processes and the conservation of resources.
February 25, 2015
Mongolia
Economy of the country:: Mongolia (Mongolia)
Economics - at a glance:
Business activity in Mongolia has traditionally been based on herding and agriculture - Mongolia's extensive mineral deposits, however, have attracted foreign investors. The country holds copper, gold, coal, molybdenum, fluorite, uranium, tin, and tungsten deposits, which make up a significant portion of government revenue and foreign direct investment. Soviet aid, at its one third of the height of GDP, disappeared almost overnight in 1990 and 1991 during the dismantling of the USSR. The next decade saw Mongolia endure both a deep recession, due to political inactivity and natural disasters, as well as economic growth, due to reform embracing, a free market economy and extensive privatization of the formerly public sector of the economy. Severe winters and summer drought in 2000-02 resulted in massive livestock die-offs and zero or negative GDP growth. This was compounded by falling prices for Mongolia's main sector exports and broad opposition to privatization. Growth averaged nearly 9% annually in 2004-08 largely due to high copper prices and new gold production. In 2008, Mongolia experienced a high inflation rate with annual inflation reaching almost 30% - the highest inflation rate in over a decade. By the end of 2008, as the country began to feel the effects of the global financial crisis, falling commodity prices helped lower inflation, but also reduced government revenues and forced spending cuts. In early 2009, the International Monetary Fund reached a $236 million Standby Arrangement with Mongolia and the country began to move out of the crisis, although the banking sector remains volatile. In October 2009, the government passed a long-awaited law on an investment agreement to develop Mongolia's Oyu Tolgoi mine, considered to be one of the world's largest untapped copper deposits. Mongolia's economy continues to be heavily influenced by its neighbors. Mongolia buys 95% of its oil products and a significant amount of electricity from Russia, leaving it vulnerable to price increases. Trade with China represents more than half of Mongolia's total foreign trade - China receives about two-thirds of Mongolia's exports. Remittances from overseas-working Mongols are significant, but have come to an economic crisis; money laundering is a growing concern. Mongolia joined the World Trade Organization in 1997 and is seeking to expand its participation in regional economic and trade regimes.
GDP (purchasing power parity):
$9.36 billion (2009 est.)
Note:
GDP (official exchange rate):
$4.203 billion (2009 est.)
GDP - real growth rates (adjusted for inflation):
-1.6% (2009 est.)
GDP - Per Capita (PPP):
$3,100 (2009 estimate)
Note:
data is in 2009 US dollars
Structure of GDP by sectors of the economy:
agricultural:
21.2 %
industry:
29.5 %
services sector:
49.3% (2009 est.)
Human Resources:
1.068 million (2008)
Labor resources by sectors of the economy:
agricultural:
34 %
industry:
5 %
services sector:
61 % (2008)
Unemployment rate:
2.8 % (2008)
Proportion of population living below the poverty line:
36.1 % (2004)
Household income or consumption per share of interest:
10% (1-
1st decile) of the lowest income households:
2.9 %
10% (10-
1st decile) of the highest income households:
24.9 % (2005)
Household income distribution - Gini index:
32.8 (2002)
Budget size:
income:
$1.38 billion
expenses:
$1.6 billion (2009)
Rising inflation (retail prices):
4.2% (2009 estimate)
Base loan rate (prime rate) from commercial banks:
21.67% (December 31, 2009 est.)
Stock of narrow money:
$451.4 million (December 31, 2009)
$510.7 million (December 31, 2008)
Stock of broad money:
$1.996 billion (December 31, 2009)
$1.791 billion (December 31, 2008)
Agricultural products:
wheat, barley, vegetables, forage crops; sheep, goats, cattle, camels, horses
Dominant sectors of the industrial economy:
construction and building materials; mining (coal, copper, molybdenum, fluorite, tin, tungsten, and gold); oil; food and drink; processing animal products, cashmere and natural fiber production
Growth rates of industrial production:
3% (2006 estimate)
Electricity - production volume:
4.03 billion kWh (2009)
Electricity - consumption volume:
3.439 billion kWh (2009)
Electricity - export volume:
21.2 million kWh (2009)
Electricity - import volume:
186.1 million kWh (2009)
Oil - production volume:
5,100 bbl/d (2009)
Oil - volume of consumption:
16,000 bbl/d (2009 est.)
Oil - export volume:
5,300 bbl/d (2009 est.)
Oil - import volume:
0 bbl/day (2009)
Oil - proved reserves:
Barrel NA
Natural gas - production volume:
Natural gas - volume of consumption:
0 cu. m. (2008 estimate)
Natural gas - export volume:
0 cu. m. (2008 estimate)
Natural gas - import volume:
0 cu. m. (2008 estimate)
Current account balance:
- $228.7 million (2009 est.)
Export volume:
$1.902 billion (2009)
Export volume - commodities:
copper, apparel, livestock, animal products, cashmere, wool, lurks, fluorite, other non-ferrous metals, coal
Export volume - partners:
China 78.52%, Canada 9.46%, Russia 3.02% (2009)
Import volume:
$2.131 billion (2009)
Import volume - commodities:
machinery and equipment, fuels, automobiles, foodstuffs, industrial consumer goods, chemicals, building materials, sugar, tea
Import volume - partners:
China 35.99%, Russia 31.56%, South Korea 7.08%, Japan 4.8% (2009)
External debt:
$1.86 billion (2009)
Stock of foreign direct investment - at home:
$NA
Stock of direct foreign investments - abroad:
$NA
Exchange rates:
togrog/tugriks (MNT) per US dollar - 1 442.8 (2009), 1 267.51 (2008), 1 170 (2007), 1 165 (2006), 1 205 (2005)