Mongolia’s economy: not a tiger but a wolf!

ELTO Intake 35

Nowadays the  Mongolian Economy is referred to as“the Wolf Economy”. Before I explain why I will give you an  overview of the economy. Then, I will discuss the disadvantages and advantages of Mongolian Economic Development. Next, I will explain the reason why the Mongolian Economy is known as “the Wolf Economy”.

 

Let’s start with the overview of the Mongolian Economy. According to the World Bank representatives in Ulaanbaatar, the growth rate of GDP reached 17.3% in 2011, and it is projected to reach 30% by 2013. Consequently, the Mongolian GDP growth is the fastest growing in the world.

 

What has made the Mongolian Economy the fastest growing? With less than 3 million people, Mongolia is located in an area 3 times the size of France. And there is a wealth of natural resources which was recently discovered. Mongolia possesses the world’s largest copper reserves, the second-largest coal reserves, the world’s second-largest deposits of rare earths, and many other hugely significant deposits of minerals ranging from gold to zinc. Put simply, Mongolia’s minerals will provide the world with supplies of many of its most valuable raw minerals for the rest of this century. That is why the country is suddenly gaining attention and attracting foreign investors.

 

Yet the question always arises – what about the risk? So, the second area of concern is the risk  of booming industry in mining in Mongolia.

 

Mongolia itself doesn’t possess the technology, skills or manpower to mine its own resources. Therefore, there is a risk that the country’s mining industry might become dependent upon its foreign investors. Unfortunately, it’s true that “Mongolia” seems like “Minegolia” for many foreign investors. In this case, our country is maybe in great danger, precisely because we have a wealth of natural resources. Many worry that mining operations will threaten our natural environment.

 

In addition to this, due to its fast  growing economy, almost every day we see new buildings, developments going up. Many global luxury high-end-brand stores such as Louis Vuitton and Emporio Armani are opening in our capital city, Ulaanbaatar. But outside the stores, only two or three kilometres away, thousands of people are living in poverty. Nowadays, over a third of the people live below the poverty line in Mongolia. Besides this, people are buying the latest model of sports cars, unfortunately, in a country that doesn’t have good roads. While the fantastic sums of money stand to be earned from Mongolia’s mineral wealth, it seems apparent that we might be developing chaotically, not sustainably. Money without policy does more harm than good.

 

Let’s move on to another positive feature of this world’s fastest growing economy. Fortunately, Mongolia is lucky for having discovered its natural resources late. As we know, some nations have reaped massive benefits from their mining industry such as Canada; others have become troubled, for example, South Africa. So Mongolia is lucky to have an opportunity to learn from past mistakes of other resource-rich countries.

 

Now I’d like to explain “the Wolf Economy”. Since often an animal symbolizes the dynamism of an economy, Mongolians determined the perfect creature to represent the up and coming Mongolian economy: “The Wolf”. Like the Asian Tigers of the 1980s, Singapore, Taiwan, and the South Korea, Mongolia is now branding itself as “the Wolf Economy”. Because a wolf is strong, clever and able to survive harsh climates and environment, we explain how Mongolia is trying to cope with its prosperity from mining. We hope we can overcome those risks I mentioned above by being strong and clever like a wolf.

 

In this connection, Mongolia is now “the wolf on the move”. But where will we move to? Will Mongolia go after Canada or the South Africa? It will depend upon how Mongolians treat the main economic driver of mining.

 

The real wealth of Mongolia is not mineral resources, indeed, it is the Mongolian people. Twenty years from now, if all this mineral wealth – which is not renewable – is not turned into renewable wealth, which is knowledge, then we will have missed the point. This underground wealth needs to stay aboveground to suit our will and aspirations.

 

To summarize, under the good governance and learning from the success stories of other resource-rich countries such as Chile, Canada and Australia, “the Mongolia’s Wolf Economy” can be on the move, off to a good start.