Economy of Mongolia

Economy Of Mongolia

Economic activity in Mongolia has traditionally been based on agriculture and the breeding of livestock. Mongolia also has extensive mineral deposits: copper, coal, molybdenum, tin, tungsten, and gold account for a large part of industrial production. Soviet assistance, at its height one-third of GDP, disappeared almost overnight in 1990–91, at the time of the Collapse of the Soviet Union (1985–1991). Mongolia was driven into deep recession, which was prolonged by the Mongolian People's Revolutionary Party's (MPRP) reluctance to undertake serious economic reform. The Democratic Union Coalition (DUC) government, 1996–2000, has embraced free-market economics, easing price controls, liberalizing domestic and international trade, and attempting to restructure the banking system and the energy sector. Major domestic privatization programs have been undertaken, as well as fostering of foreign direct investment through international tender of the oil distribution company, a leading cashmere wool company, and banks. Reform has been held back by the ex-communist MPRP opposition and by the political instability brought about through four successive governments under the DUC. Economic growth picked up in 1997–99 after stalling in 1996 due to a series of natural disasters and increases in world prices of copper and cashmere. Public revenues and exports collapsed in 1998 and 1999 due to the repercussions of the Asian financial crisis. In August and September 1999, the economy suffered from a temporary Russian ban on exports of oil and oil products. Mongolia joined the World Trade Organization (WTO) in 1997. The international donor community pledged over $300 million per year at the last Consultative Group Meeting, held in Ulaanbaatar in June 1999.