Economy of Mongolia: description and characteristics

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:48

Today Mongolia's 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 sectors, 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 thisthe indicator is declining at an active pace.

In the structure of the GDP of the Mongolian economy, mining accounts for a large part, 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 technology also have their share in GDP.

Most of the working-age 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 manufacturing, in the private sector, in the mining industry.

Type of economy

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. Mongolia is currently classified as a transition country.

At the same time, during the transformation process, the structure of production, property relations, and management tools are transformed.

The economy of Mongolia 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 back in the 1980s. The restructuring that began inSoviet Union, only accelerated this process. Large-scale socio-economic transformations began to take place after 1991.

Mongolia is a country with a transitional economy that has been actively developing recently. 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. The deposits of fluorspar and tungsten, which are considered medium in terms of the amount of reserves, have been successfully developed for a long time.

Copper-molybdenum ore is mined in Treasure Mountain. 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, called Oyu Tolgoi. Recently, the interest of investors in this country has increased, since most of the land here has not yet been studied by geologists, which means that manyminerals have not yet been found.

Industry and engineering

The main industries in the economy of Mongolia are textile, cloth, wool, leather, sheepskin coats, meat processing, building materials. The country ranks second in the world in the production of cashmere wool.

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 that will be able to carry from 300 to 450 passengers at a time.

Agriculture

Describing briefly the economy of Mongolia, enough attention should be paid to agriculture. The country has a harsh continental climate, so this industry remains vulnerable to cold, drought and othernatural 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.

Recently, 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 have also been passed regarding banking and taxation, debt and credit.

Transportation

The country has developed rail, road, air and water transport. The decision to build the railway was made in 1915. Now the country has two main highways for trains.

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.

Total length of waterways in the country totalabout 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.

Roads

Most of the roads here are unpaved or gravel. Most paved roads are located in the Ulaanbaatar area leading 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 Mongolia's economic policy. There are 80 airports in the country, of which 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 fixed-wing aircraft.

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 registration procedure, waiting timelandings are 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 procedures for customs control and clearance.

There are no flight attendants, kitchens or toilets on these 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, in addition to a large number of historical monuments of Buddhist monasteries, untouched nature.

Most foreign tourists 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 approximately 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, semi-precious stones.

More80% 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, consumer goods are imported into the country.

Approximately one 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 in the country in the near future.

Financial sector

The official currency 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.

Most banks allow you to use credit cards, there are exchange points in all hotelscountries. Traveler's checks are also accepted as payment here without any problems.

The Mongolian Stock Exchange was opened in 1991.

People's 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 government sets the lowest hourly or monthly wages by law. In 2017, the minimum wage was just 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.