Mongolia, with a land area of about 1.6 million sq. km. and a population of about 2.9 million is the world’s most sparsely populated country. The land ranges from desert to semi-desert to grassy steppe, with mountains in the west and south-west. Arable land is estimated to constitute only 0.8 percent of this vast country. Landlocked between Russia and China, Mongolia has shown steady growth in the recent years. GDP per capita increased over the years and Mongolia is now a middle-income country.
After recovering quickly from a brief but difficult period in 2008-09, Mongolia’s economy is growing at a fast pace. Driven by the mining sector, the economy grew at more than 16% in the first quarter of 2012 and on average has grown at more than 9% in the last decade. With the expected launch of new large-scale mining projects, Mongolia is likely to witness rapid growth. Mongolia has a unique chance to achieve development progress that is almost unprecedented globally. However, processing and manufacturing capacity are limited and exports are dominated by raw materials. To achieve its potential, Mongolia needs to balance immediate investment needs with long-term sustainability concerns.
The Millennium Development Goals (MDGs) are strongly embedded at the policy level, adopted by a Parliament Resolution in 2005 and then formed the basis for the MDG-based Comprehensive National Development Strategy (NDS) of 2008-21. Mongolia is one of the few countries to have a ninth MDG to emphasize democratic governance and human rights as necessary conditions for the achievement of all the MDGs.
Modern humans reached Mongolia approximately 40,000 years ago. In 1206 Genghis Khan founded the Mongol Empire which became the largest land empire in world history. Mongolia later came under Chinese rule and won its independence from China in 1921. The Mongolian People's Republic was then established with Soviet influence. Mongolia became a UN member state in 1961. Following the dissolution of the Soviet Union, Mongolia saw its own relatively peaceful democratic revolution in the early 1990’s which led to a multi-party system, a new constitution of 1992, and a transition to a market economy. This transition resulted in an upheaval of structures that had been in place for 70 years and saw Mongolia's trade with Russia decline by 80% and had a strong impact on peoples’ lives.
Throughout history, livestock raising by nomadic herders has been the major economic activity. In the early 20th century industrialization began, spurred by the Soviet Union and largely based on wool processing and extraction of minerals, mainly coal, copper, gold and fluorspar.
Mongolian economy has a narrow base. Mineral commodities account for about 80% of the country’s exports and mining provides around 40% of total government revenues. The manufacturing sector contributes only about 11% to the GDP, about half of the mining sector’s contribution. Excessive dependence on mining revenues exposes the economy to global price fluctuations.
The global economy is at a particularly dangerous point, and there is a real risk of a substantial slowdown in world growth similar to what happened in 2008. While the biggest concern is the European sovereign debt crisis, the recent slowing down in China is likely to have serious repercussions. Mongolia’s exports contracted in April 2012 for the first time in two years and reflected weaker global economic conditions, sliding commodity prices and slowing growth in China. China is Mongolia’s main and dominant trade partner, accounting for 93% of its exports in 2012, mainly in minerals.
The challenge for the government is to get the right mix of policies that can to succeed in converting the coal and copper resources into an inclusive growth path that spreads prosperity to all Mongolians.
In spite of rapid economic growth in recent years, more than a quarter of the people (27.4% in 2012) remain below the national poverty lines. It is imperative for Mongolia to diversify its economy and create alternative employment sources, especially for the youth. The overall unemployment rate is around 10% but nearly one in four youth (15-24 years) are unemployed. A key limitation is the low skill base of the youth.
Women are active in most areas of the economy and society, however, gender-based disparities persist in terms of poverty, vulnerability, economic opportunities, and political decision making. The 2010 Universal Periodic Review (UPR) expressed concerns about poverty, erosion of public services and persistence of gender stereotypes. There are also capacity constraints across many government institutions impeding the ability to deliver development results.
The country is affected by serious ecosystem degradation, including that of pasture land, forest and water and loss of biodiversity and air pollution in urban areas. The growing mining sector and the impacts of climate change pose new challenges to Mongolia’s environment. There is a lack of adequate water and sanitation provision in rural and peri-urban areas. Urbanization, which is already at a relatively high level, puts additional pressure on service provision.
Mongolia is prone to natural disasters including ‘dzud’ (harsh winter conditions leading to widespread death of livestock impacting on people’s livelihoods), forest and steppe fires, dust storms, flash floods and earthquakes. National responses to large-scale emergencies have shown a need for capacity development and enhanced coordination in this area.
Mongolia has achieved remarkable successes in the last two decades. It has gone through a very rapid transition and established a democratic system underpinned by free and fair elections with solid institutions. It has established a well functioning market economy. Many countries are now learning from the Mongolian experience.
Mongolia is a party to over 30 international conventions on human rights and ratified the UN Convention against Corruption in 2005 and passed the anti-corruption legislation in 2006. It has established a range of formally independent institutions strengthening democratic governance. Mongolia has also joined many environment-related UN Conventions and International Treaties and passed more than 30 environmental laws and reforming many other laws.
Economically, Mongolia is growing at one of the highest rates in the world and although still at high levels, poverty is decreasing. Currently, 27.4% of people were estimated to live below the national poverty line in Mongolia in 2012. While still high, this has come down from 33.7% in 2011 and 38.7% in 2010.
Mongolia has very high enrollment into the education system and has demonstrated progress on reducing maternal and child mortality.
Mongolia has also demonstrated leadership in the global arena when it took on the Presidency of the Community of Democracies on 1 July 2011. Mongolia is also in the process of establishing an international think-tank for land locked developing countries.