Mongolia Economy

By | October 1, 2021


Although industry has been entrusted with the role of leading sector of the economy, primary activities (agriculture and above all livestock breeding) still form the basis of the country’s productive life, occupying more than a third of the active population and participating in a relevant to the formation of GDP, even in adverse climatic conditions. Agriculture, which, moreover, can count on a very small area (less than 1% of the national territory), is an element of novelty in the economic panorama of Mongolia, since it was “born” in practice only in the 1950s; however, its development has been very important, so much so that it is able to meet the demands of the internal market. The main crops are wheat, oats and barley, potatoes and vegetables; previously organized into large state-owned companies and cooperatives, the sector changed its structures following the privatization of land (October 1991). As for the zootechnical patrimony, during the period of Soviet influence government interventions led to considerable progress from the qualitative and quantitative point of view; during the 1990s, the sector (once mostly belonging to farmers’ cooperatives) was privatized, while the pastures remained state-owned. According to smber, livestock provide the food base of the population: milk, meat and other no less important products such as wool and skins, destined for industrial processing and export. In the mountains, cattle predominate, while in the steppe sheep and goats are raised as well as horses; finally, in the semi-desert areas camels prevail. The exploitation of the forests provides a fair amount of wood.


The mineral resources are huge; the mining activity currently mainly concerns copper, coal, lignite, fluorite, manganese, tungsten, tin, zinc, molybdenum, gold, silver and oil. Electricity derives mainly from coal-fired thermal plants. Still to be explored are the Gobi oil fields. Particular attention is paid to the strengthening of the industry, based on the Soviet model of the kombinat (grouping of different companies, within which an appropriate concentration of production cycles is implemented) and focused on the transformation of local raw materials; the industrial sector was the last, in chronological order, to be affected by privatization processes: only starting from 2000 did the government, in fact, plan the passage to private individuals of large state-owned enterprises, in order to modernize the productive apparatus and to encourage openness to foreign companies. Among the industrial plants present in the area there are cement factories, metallurgical and mechanical plants, as well as canneries and other agri-food complexes, textile companies, woodworking plants etc. The driving sectors are the mining sector (copper, cashmere, camel wool, leather and hide. The major mining and industrial poles are located in the north-central part of the country, between the capital, Erdenet and Darhan, while in Choybalsan, in the eastern part, there are the cement and building materials industries.


The financial system is not yet adequately articulated and there is little control over the banking sector; the taxation system is complex and foreign investors are pressing for a more incisive fight against corruption. The development of infrastructures in the area is of fundamental importance to allow Mongolia to emerge from isolation. Among the various means of transport, the railway, whose first section dates back only to 1939, represented a factor of great importance for the socio-economic history of the country. Before then, in practice, Mongolia knew no other means of communication than the animal one. The territory is crossed from N to S by the Trans-Mongolian, which is connected to both the Russian Trans-Siberian networkboth to the Chinese one; moreover, eastern Mongolia is served by a branch of the Trans-Siberian, which extends into the country as far as Choybalsan. The roads, only partly paved, also connect to the Russian and Chinese networks, the two main arteries follow, one the fundamental railway line, the other runs through the entire country from W to E. inland navigation, especially on the Selenga River and in Lake Hövsgöl, but a particularly important role is played by the air services managed by MIAT (Mongolian Civil Air Transport); the main airport is of course that of Ulan-Bator. Mongolia’s trade relations continue to be mainly oriented towards its two great neighbors, China and the Russian Federation, but also towards the other countries of Central and East Asia, as well as the United States and Canada. The trade balance sees a substantial breakeven situation, with exports (gold, copper, fluorite and other metals, animal products, wool and cashmere) ahead of imports (industrial machinery and plants, fuels, prefabricated buildings, food products etc.). Tourism, which can count on a short season due to the particular climatic conditions of the region, nevertheless has great potential due to the naturalistic and historical heritage of the country.

Mongolia Economy