Mongolia’s economy needs diversification
30 years pass without the freedom of development
2 сар, 2 долоо хоног өмнө
Mongolia’s unique feature or a particular thing that differentiates the country from others? Our special feature is a democracy and freedom of the press. Indicators of democracy are great enough. On papers and international reports, Mongolia is a beautiful country like a rose, a brilliant star of democracy. In reality, it is completely different.
Democracy is being separated from real life. It has been 30 years without a “freedom of development.”
Let us continue with the corruption-filled series of poverty alleviation of Mongolians, the emergence of populism, the issues in the independence of the judiciary, the obstacles of public institutions, and the societal stresses. Poverty did not improve significantly since 1995. Discussions on necessary improvement began in the XXI century. There are still no results. I am writing to make a conclusion about it.
Our economy needs only a few important factors. Let us look at the economy at a macro level. Only the mining sector growth is visible, but it is accounting for a big part of the economy. However, it is not a good thing in the long term as a macroeconomy. Why does the mining growth affect the economy? The IMF has implemented six programs in our country. IMF recommends that more flexible, budget-free economy and more importantly, higher employment, and profitable businesses. In the 1990s, the transition program was successful. The “Stand by” program has helped a lot in 2008-2009 during the global economic crisis. The next program started in 2016-2017. There is a light. The debt burden equaled 100 percent of GDP, which now stands at 70 percent. Mongolia has a GDP of USD 11 billion. The IMF’s sustainable development program is worth 5.5 billion. The economic growth has fallen from 17 percent to negative 2 percent when the IMF’s sustainable development program started. What has saved us improved the economy is actually the growth of China’s coal imports.
Our economy is dependent on many things. The infrastructure is not developed enough. Until now, almost 3 percent of the 1000 km of the road had pavement, the only line of the north-south railway, which is dependent on Russia’s geopolitics. When we try to build another railway, we will have to deal with Russia’s geopolitical interest. As long as we have Ulaanbaatar Railway JV, there will be Russian interests. I do not want to blame it.
However, the multi-pillar foreign policy choice is invoking to be friendly with all countries around the world. There is no such relationship with all countries. Also, there is no noticeable economic relationship improvement with any country. Although it is the world’s least densely populated area, Mongolia is clumping in the capital. Huge social issues are created because of this.
The dissociation had already processed and different social conditions are growing rapidly. Social licensing issues are serious. Anti-mining conflicts and disputes tend to rise in mining-dependent countries, and civil movements trigger social disintegration. Even with 70 million livestock, agriculture does not strengthen social capital. Mining has also dominated other sectors, which is a negative impact. We only talk about a single line of cashmere to improve the non-mining sector. There is no ongoing activity in the development of rural areas and the overall turnover of agriculture. If our cashmere enters the world market, China will be our rival.
There is no coordination between mining and other economic sectors, so there is a war between mining and livestock. Disintegration is accompanied by populism. Populism has started to break the fundamental principles of democracy.
In addition, Mongolian politics is a restriction to economic and social development. The policy is unstable and uncertain. There are 140 development policies and programs to be followed. Most recently, the “National Program on Unemployment and Poverty Reduction” was adopted. It was supposed to promote economic growth, reduce unemployment, alleviate poverty, become an exportoriented country, and encourage other products, leading sectors, public-private partnerships, and implement the goal of reducing unemployment and poverty by human development and social protection policies. I hope these do not diverge and eventually be forgotten or changed by the next program.
There are 2000 draft documents, conventions, and recommendations. There is no mechanism to control the implementation of these documents. None at all
In fact, the economics of postcommunist countries that transcend Central and Inner Asia are even more profound. Mongolia is left behind by economic diversification. Mongolia has been marked as the country with the unspecified economy. Even worse than Tajikistan. When it comes to primary products, it does not go further than adding value to natural gas. That is why there is no diversity, just as President Battulga Khaltmaa said, it is simply an “inefficient economy.”
Those people who received loans from the SME Development Fund should diversify the economy. Government funds do not cover the SMEs, but international funding is effective. However, it does not reach the level of economic diversification. Having an export-oriented economy can save this country, and the government expects that poverty will be eradicated with an exportbased economy. They convince people to believe it. However, they do not go farther than talks.