Regions of Mongolia
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Sources of information:
Features of the Mongolian economy
Mongolia is an agricultural and industrial state that today trades with more than 80 world countries.
Note 1
Until the nineties of the 20th century, 90% of trade in Mongolia was trade with the Soviet Union, today more than 40% is trade with the Russian Federation and China, the rest is trade with highly developed countries: Japan, Switzerland, South Korea and the USA.
Most people are urban dwellers, however, Mongolia's economy today is concentrated in industries such as mining and agriculture. A significant portion of the country's industrial production comes from mineral resources, including copper, tin, molybdenum, coal, tungsten and gold.
Due to the harsh continental climate, the country has an agricultural sector that is vulnerable to natural disasters during periods of severe cold and drought. The country includes small arable lands, about 80% of the territory is used as pasture. Most of the rural population produces livestock, which consists of sheep, cattle, goats, camels and horses. Mongolia has more livestock per capita than any other country in the world.
Specifics of Mongolia's industry
Mongolian industry is quite extensive; this country has opportunities for the development of a large number of manufacturing industries, the products of which are exported to other countries, and are also in great domestic demand.
Note 2
Initially, the country developed agriculture, food production, textile and leather products. After World War II, the state received significant financial assistance from the USSR and China, which contributed to a significant expansion of industry.
In modern conditions, there are enterprises in Mongolia:
- steel foundry,
- iron foundry,
- coal mining industry.
The location of industrial enterprises is concentrated in more than 20 cities, while the bulk of the output is consumed domestically in the state. Today, more than 1,000 types of agricultural products are offered in Mongolia: products made from fur, leather, wool, and furs and leather themselves are also sold. These products are exported and also used by the population of the country. To a large extent, Mongolia works for itself, while having everything it needs.
Mining industry of Mongolia
Mongolia has a widely developed mining industry. But, despite the abundant mineral deposits, they are characterized by limited development. Mongolia has four brown coal deposits, concentrated in Nalaikha, Sharyngol, Darkhan, and Baganur. The southern part of the country in the region of the Taban Tolgoi mountain range is characterized by the presence of hard coal; the geological reserves of coal in this place can be calculated in billions of tons.
Deposits of tungsten and fluorspar with average reserves have been known and developed for a long time. A copper-molybdenum deposit was found in Treasure Mountain. This deposit leads to the creation of a mining and processing plant, around which the city of Erdenet is built.
Oil was discovered in Mongolia in 1951, after which an oil refinery was built in the city of Sain Shanda (a city southeast of Ulaanbaatar), which is located near the border with the Chinese Republic. The plant existed for 20 years; in 1970, oil production ceased. Also, large deposits of phosphorites were discovered near Lake Khubsugul, and their mining is beginning. But soon, due to environmental reasons, all work is reduced to zero.
Before the start of reforms in the country, with the help of the Soviet Union, the search for zeolite, a mineral of the aluminosilicate group, which is used in livestock and agriculture, as adsorbents and biostimulants, was carried out unsuccessfully.
Today, the main mining industry in Mongolia is the coal industry, with the advantage of brown coal mining. The main part of coal production is concentrated in the SharynGol coal mine, the annual production of which is more than 1 million tons. It is located near the city of Darkhan, and in the Nalaya mine (capacity is more than 600 million tons). Smaller sections are present in the Under Khan area and other areas.
Electrical energy is produced at thermal power plants, the largest of which is located in Darkhan.
Manufacturing industry
Mongolia's manufacturing industry includes light and food industries. These industries account for more than 1/2 of the state's gross industrial output and more than 1/2 of the employed workers in the state.
Larger enterprises are represented by an industrial complex with eight factories and factories in Ulaanbaatar, Choibalsanei.
The building materials industry includes a house-building plant in Ulaanbaatar and a brick and cement plant in Darkhan.
First of all, the local industry was based on the processing of livestock raw materials, and the main types of products were fabrics, leather goods, food products and felt.
A large number of new industrial companies appeared in Mongolia after the end of World War II. The period of growth was characteristic of the fifties and sixties, at that time the state received large financial assistance from China and the USSR.
Since the eighties, local industry has provided about a third of the entire country's gross national product. After the end of World War II, the share of heavy industry in the total volume of industrial production increased significantly. There are more than 2 dozen cities in the country with enterprises of national importance. In addition to Ulaanbaatar and Darkhan, the largest cities are Erdenet, Sukhbaatar, Baganur Choibalsan.
Mongolia produces a large number of industrial and agricultural products, a large share of which is consumed in the country. Furs, leather and fur products, leather and wool, livestock and animal products, as well as molybdenum ore, phosphorites and fluorites are intended for export.
Mongolia is one of the former Eastern Bloc countries with economies in transition. EconomyMongolia is mainly agricultural.
After a long period of stagnation (from 1990 to 2002, economic growth ranged from +3 to −3% per year), today the country is experiencing economic growth, which ranges from 5.3% to 10% per year; At the same time, the main growth is in the services sector, whose share has increased to almost 40% of GDP, and in the mining of copper and gold due to an increase in world market prices for them. True, the growth in recent years has not affected the poor part of the population: about 40% of Mongolia’s population lives below the poverty line, the same as in 1990. The difficult years of reforms, although they led to an increase in the share of the private sector of the economy to 80%, but further exacerbated social differences and the difference in living standards between urban and rural areas.
According to the UN World Nutrition Programme, the proportion of chronically undernourished people in Mongolia averages 43%. Infant mortality is very high. 58 out of a thousand newborns die in infancy. During the cold season, many children and teenagers huddle in heating pipe tunnels near Ulaanbaatar. The bottom of these tunnels is covered in excrement and infested with rats. Representatives of humanitarian organizations estimate that the number of people living in the tunnels is approximately 4,000 to 10,000 people.
Due to very infertile lands, long winters, low rainfall, the nomadic tradition of the population and a short growing season (only 95-100 days a year), agriculture in Mongolia is very poorly developed. However, against this background, highly specialized animal husbandry arose. At the same time, 5 types of livestock are bred here. Livestock products and the use of the physical strength of farm animals are an integral part of the nomadic lifestyle of the local population. Thus, sheep are bred for wool, milk, meat, goats for producing hides and milk, yaks for producing milk, leather, meat, and horses and camels are used as a means of transport, for transporting goods and for producing milk.
Mongolia's traditional agricultural products include meat, milk, sheep's wool and cashmere, as well as small amounts of grain, potatoes and vegetables.
Modern agriculture developed slowly in this country. The era of socialism was marked by collectivization, which began in the 1930s. By 1959, 100% of agriculture was collectivized. In 1960, its share of national income was reduced to 22.9%, but it still employed 60.8% of Mongolia's working population. After the country joined the Council for Mutual Economic Assistance in 1962, the volume of assistance to its agriculture from the USSR and other CMEA members, primarily Czechoslovakia and Hungary, increased.
In the late 1980s, agriculture still constituted a significant part of the economy of the Mongolian People's Republic. In 1985, it employed 33.8% of the working population, but generated only 18.3% of national income. The country's industries primarily processed food and timber for domestic use, and animal products such as hides and hides for export. In 1986, almost 60% of Mongolia's exports were agricultural products.
After the end of the socialist economic system, profound changes occurred regarding the ownership structure in the country's agriculture. However, its economic orientation still remains dependent on natural conditions and traditions. Thus, in 2006, 80% of income from agriculture came from livestock farming. But now 97% of livestock farming was concentrated in private hands. Subsequently, the share of agriculture and livestock farming continued to decline and in 2011 amounted to less than 20% of the gross national product (in 1995 it was 38%). However, the agricultural sector still employs a third of the country's population.
Mongolia is one of the 10 countries in the world with the largest mineral reserves, but to date only a third of them have been fully explored, and these are almost 6,000 deposits of various minerals, including coal, copper, uranium (about 2% of world reserves) , oil, gold, silver, fluorite, molybdenum, zinc and diamonds.
Deposits of copper and coal are still developed mainly by open-pit mining. This leads to large-scale changes in the landscape and corresponding consequences for the flora and fauna of the country.
The country's official unemployment rate is 2.8%, although this is likely a gross underestimate. High inflation was successfully contained after 1996, and since then its level has been around 4%. Mongolia's external debt is about US$1.86 billion.
In 2007, the volume of exports of goods in monetary terms amounted to 1.95 billion US dollars, of which 41.6% were copper concentrate, 12.1% gold, 9% zinc concentrate, 9% cashmere and 6% stone coal. They imported mainly petroleum products, machinery and equipment, various installations, automobiles, electronics and food products. In 2007, 72% of all exports went to China, followed by Canada, which accounted for 9% of Mongolia's exports.
The country's largest suppliers in the same year were Russia (34%), China (31%), Japan (6%) and South Korea (5.5%). To reduce dependence on its two immediate neighbors, Mongolia is implementing the so-called “third neighbor” policy.
Thus, the volume of trade with Germany reached 82 million euros in 2008, and there is a clear upward trend. The volume of exports to Germany amounted to 15.4 million euros, and the volume of imports from this Western European country amounted to 66.6 million euros.
There are also several agreements with the EU on trade policy, customs and textiles. In addition, Mongolia is a member of important international organizations such as the WTO, the World Bank, and the Asian Development Bank.
The country's state budget expenditures in 2009 amounted to 1.6 billion US dollars, and revenues amounted to 1.4 billion US dollars. Thus, we can talk about a budget deficit of 4.6% of GDP.
Mongolia's public debt amounted to US$1.6 billion in 2008, or 33.1% of GDP.
Mongolia is an agrarian-industrial country. Mongolia currently trades with more than 80 countries around the world. Trade turnover is more than 2 billion US dollars. If until the 1990s, 90% of Mongolia’s foreign trade was occupied by trade with the USSR, today more than 40% is trade with the Russian Federation and the People’s Republic of China, and the remainder is occupied by trade with such highly developed countries as Japan, the USA, South Korea, Switzerland.
Although more people live in cities, Mongolia's economy remains centered on industries such as agriculture and mining. Mineral resources such as copper, coal, molybdenum, tin, tungsten and gold make up a significant part of the country's industrial production.
In the period from 1924 to 1991. The MPR received large financial and economic assistance from the USSR. At its peak, this aid accounts for one third of its GDP. In the early 1990s and into the next decade, Mongolia's economy experienced a severe recession followed by stagnation. Extensive droughts in the summer and winter of 2001 and 2002 had a serious impact on agriculture and led to a marked slowdown in the country's GDP growth. Mongolia has a high level of inflation. The global financial crisis caused a decline in many industries dependent on exports and investment from abroad.
Due to Mongolia's harsh continental climate, agriculture remains vulnerable to natural disasters such as severe drought and cold. The country consists of small arable lands, but about 80% of the territory is used as pasture. The majority of the rural population is engaged in herding livestock, consisting of sheep, goats, cattle, horses and camels. Mongolia has more livestock per capita than any other country in the world. Wheat, potatoes and other vegetables are also grown, in addition to tomatoes and watermelons. GDP at PPP: $9.48 billion (2008). GDP per capita PPP (2008): $3,200. Unemployment rate: 2.8% (2008).
Industry of Mongolia
Industrial growth - 4.1% in 2002. Electricity production in 2005 - 3.24 billion kWh. Electricity consumption - 3.37 billion kWh. Electricity export - 18 million kWh. Import of electricity - 130 million kWh.
Statistical indicators of Mongolia
(as of 2012)
Extractive industry. Despite the abundance of mineral deposits, their development is still limited. There are 4 brown coal deposits in Mongolia (Nalaikha, Sharyngol, Darkhan, Baganur). In the south of the country, in the area of the Taban Tolgoi mountain range, coal was discovered, the geological reserves of which amount to billions of tons. Average reserves of tungsten and fluorspar deposits have long been known and are being developed. Copper-molybdenum ore found in Treasure Mountain (Erdenetiin ovoo) led to the creation of a mining and processing plant, around which the city of Erdenet was built. Oil was discovered in Mongolia in 1951, after which an oil refinery was built in Sain Shanda, a city southeast of Ulaanbaatar, near the border with China (oil production ceased in the 1970s). Near Lake Khubsugul, gigantic deposits of phosphorites were discovered and their mining even began, but soon, due to environmental considerations, all work was reduced to a minimum. Even before the start of reforms in Mongolia, with the help of the USSR, the search for zeolites, minerals of the aluminosilicate group, which are used in animal husbandry and agriculture as adsorbents and biostimulants, was carried out unsuccessfully.
Currently, the main branch of the mining industry is coal (mainly lignite). Most of the coal production is concentrated at the Sharyn-Gol coal mine (annual production of over 1 million tons), near the city of Darkhan, as well as at the Nalaya mine (with a capacity of over 600 million tons). There are a number of smaller sections in the Under Khan area and others. Electricity production is at thermal power plants (the largest thermal power plant in Darkhan). Manufacturing industry. The light and food industry accounts for more than one second of gross industrial output and more than one second of employed workers. The largest enterprises are: an industrial plant with 8 factories and factories in Ulaanbaatar, Choibalsanei, etc. In the building materials industry, an important place among the enterprises is occupied by a house-building plant in Ulaanbaatar, a cement and brick factory in Darkhan.
Initially, local industry was based almost exclusively on the processing of livestock raw materials, and the main types of products were woolen fabrics, felt, leather goods, and food products. Many new industrial enterprises appeared in Mongolia after the end of World War II - especially in the 1950s and early 1960s, when the country received significant financial assistance from the Soviet Union and China. In the 1980s, local industry provided approximately 1/3 of Mongolia's national product, while in 1940 it was only 17%. After the end of World War II, the share of heavy industry in total industrial production increased significantly. There are over two dozen cities with enterprises of national importance: in addition to the already mentioned Ulaanbaatar and Darkhan, the largest are Erdenet, Sukhbaatar, Baganur, Choibalsan. Mongolia produces more than a thousand types of industrial and agricultural products, most of which are consumed domestically; furs, wool, leather, leather and fur products, livestock and animal products, phosphorites, fluorites, and molybdenum ore are exported.
Agriculture of Mongolia
Agriculture has always been the basis of Mongolia's economy. In the context of the transition to the market, its importance has increased. It employs 50% of the country's population (in 1950 - about 80%), and produces more than 40% of GDP. In terms of livestock per capita, we rank third in the world, second only to Australia and New Zealand. Until the early 40s, when industry formed into an independent sphere, agriculture was the only branch of material production in the country. As recently as 1950, it produced 60% of national income. Then its share decreased: in 1970 - to 25%, in 1975 - to 22.4%. Currently, it has increased slightly – to almost 30%. At the same time, over 50% of export products are agricultural raw materials, and taking into account products made from them - over 70%.
The level and pace of agricultural development largely determine the most important national economic proportions. Such traditional industries as light and food industries completely depend on its condition, since the costs of agricultural raw materials constitute the bulk of their production costs. Pasture farming continues to be the main economic activity. Today, Mongolia is among the leading countries in the world in terms of livestock per capita (approximately 12 heads per person).
Based on the Foreign Investment Law adopted in 1990, citizens of other countries were given the opportunity to own shares in various types of enterprises - from firms with 100% foreign capital to joint ventures. New laws were passed regarding taxation and banking, credit and debt obligations. In May 1991, a privatization law came into force, according to which state property could pass into the hands of “law-abiding” citizens (that is, those who had not previously committed serious crimes) permanently residing in the country. Each citizen was given a special investment coupon that could be bought, sold or given to any other person. Holders of such coupons became active participants in special auctions through which state property was privatized. Later, in 1991, “state farms” and cooperative livestock associations were liquidated, and the transfer of land and livestock to private ownership began.
Foreign trade of Mongolia
Mongolia, as a member of the World Trade Organization, in March 2005 presented its trade policy, which is quite liberal, for discussion by members of this organization. In 2002, the Government of Mongolia established uniform five percent customs rates on most imported goods. For the further development of Mongolia's foreign trade, the decision of the European Union to include Mongolia, as a developing country with a vulnerable economy and as a landlocked country, in the GSP+ program is important. Thus, from July 1, 2005, Mongolian goods began to be imported into the European market without customs duties.
The total turnover in foreign trade for the first half of 2008 amounted to 2,971.3 million US dollars, including exports of 1,276.3 million dollars, imports of 1,695.0 million dollars. The deficit amounted to 418.7 million US dollars, which is 386.5 million US dollars more compared to the same period last year. The total trade turnover compared to the same period in 2007 increased by 74.3%, exports - by 52.6%, imports - by 95.2%. The negative balance of foreign trade was significantly affected by the growth of imports, which is 42.6 points more than the volume of exports.
Imports mainly consist of petroleum products, equipment and spare parts, vehicles, metals, chemicals, construction materials, food and consumer goods. In 2004, imports amounted to $1 billion.
In 2005, imported goods came from: Russia - 34.5%, China - 27.4%, Japan - 7.1%, South Korea - 5.3%. In the total volume of imports, mineral products increased by $196.4 million, pulp, paper, cardboard and products made from them - by $189.2 million, vehicles - by $133.7 million, cars, electrical equipment, televisions, spare parts - by 92.3 million. dollars, metallurgical products - by 68.1 million dollars, food products - by 37.2 million dollars.
Mongolian exports include: minerals (copper, molybdenum, tin, spar concentrate), raw materials of animal origin (wool, cashmere, leather, fur), consumer goods (leather, sheepskin, leather products, carpets, cashmere, camel knitwear, wool blankets and cashmere). The country's interior is rich in mineral resources, including vast deposits of coal, iron ore, tin, copper, uranium, petroleum, zinc, molybdenum, phosphorus, tungsten, gold, fluorite and semi-precious stones.
Exports: ($2.5 billion in 2008) - copper, molybdenum concentrate, meat, live cattle, animal products, goat fluff, wool, hides, coal. The main buyers in 2008 are China (76%), Canada (9%), Russia (3%). Imports: ($3.6 billion in 2008) - fuel, machinery, cars, food, industrial consumer goods, chemicals, building materials, sugar, tea. The main suppliers in 2008 are Russia (35%), China (29%), Japan (8%). External debt - $1.6 billion (in 2008).
Mongolia is a member of the World Trade Organization (since 1997). The country's main trading partners are China and Russia, and Mongolia's economy largely depends on these countries. In 2006, 68.4% of Mongolia's exports went to China, while imports accounted for only 29.8%. Mongolia imports about 95% of its petroleum products and a significant share of its electricity from Russia, making the country extremely economically dependent.
Transport of Mongolia
The main modes of transport in Mongolia are: railway, road, air, water. The Mongolian Railway is a railway on the territory of Mongolia. The official name is the Russian-Mongolian joint-stock company “Ulaanbaatar Railway”. Rail transport accounts for 80% of all freight and 30% of all passenger traffic in Mongolia. Following the democratic revolution in the 1990s, Mongolia experienced a decline in freight and passenger traffic. But already in 2001, passenger traffic indicators recovered to their previous level and amounted to 4.1 million passengers per year. By 2005, the volume of freight traffic had also recovered.
Train of the Trans-Mongolian Railway in the Gobi DesertToday, the Mongolian Railway is one of the leading sectors of the economy of Mongolia, on the work of which the economic development of the entire country largely depends. At the beginning of 2005, the operational technology of the Mongolian Railway was radically changed, as a result of which the qualitative and quantitative indicators of the road were improved: the turnover of cars was doubled and the average weight of trains was increased. The total length of railways in 2004 is 1810 km.
Road transport. There are 75 thousand km of highways in Mongolia, according to state records, but they are almost entirely unpaved, that is, in any direction there are half a dozen well-trodden paths, some of them lead to a yayla, a watering hole, a somon or a settlement that has not yet migrated from these places And as a result, you cannot travel without a guide! Herders only know directions. Nobody cares where any of these roads lead. The driver of a truck, UAZ jeep, and a guide in an SUV minibus know their roads by signs. There are no signs. Road culture in the pre-conception period. The map is often a source of misinformation. Mountain rivers have demolished bridges, now there is no one to restore them, new roads have been built on the plain in the desert, where rivers can be forded.
The asphalt road surface starts from Erdene, which is 72 km east of Ulaanbaatar, the road to the first capital of Genghis Khan, Kharkhorin, is paved and continues 300 km to the aimak center of Arvaikheer. The soil in Mongolia is rocky, in the mountains the road is made of coarse crushed stone and small cobblestones, and in the desert it is made of coarse sand and small gravel. Transitional form from one road condition to another “washboard” wave wheel modulation of the soil by heavy machines.
Air transport. As of 2006, there were 44 airports in Mongolia. Of these, 12 had runways with artificial turf. Ten of these stripes had lengths in the region from 2438 to 3047 meters, and the other two were between 1524-2437 meters.
Chinggis Khan International Airport, located in the suburbs of Ulaanbaatar, is the only international airport in Mongolia. Direct flights are available to Berlin, Moscow, Beijing, Hohhot, Seoul, Yekaterinburg, Irkutsk, Ulan-Ude and Tokyo.
The remaining 32 airports have unpaved runways. On two of them the runway is over 3047 meters, on three - between 2438-3047 meters, on twenty-four - between 1524-2437 meters, on two more - between 914-1523 meters, and one airport whose runway is as long as less than 914 meters. Mongolia also has one heliport.
According to information as of June 2007, airlines operating in Mongolia are: MIAT (Mongolian Irgeniy Agaaryn Teever), Aero Mongolia, and Isinis Airways. They operate both domestic and international flights. Water transport. In Mongolia, 580 km of rivers and lakes are accessible for navigation, but water transport is more or less developed only on Lake Khovsgul. Selenga and Orkhon are also navigable (the length of the navigable sections is 270 and 175 km, respectively), but water transport on them is insignificantly developed, although a border boat on the Selenga River patrols the Russian-Mongolian border. Lakes and rivers freeze in winter; navigation usually opens in May and ends in September.
Marine fleet. Mongolia is the second largest landlocked country in the world (after Kazakhstan). However, this did not prevent her from registering her ship registry (The Mongolia Ship Registry Pte Ltd) in February 2003. Since registration, Mongolia has been systematically increasing the number of ships flying its flag. And in 2003, revenues to the treasury amounted to about $20,000,000.
Banking system of Mongolia
Back in the early 90s, they began to rebuild the banking system, as a result it became two-tiered - the Central Bank ceased to engage in ordinary banking activities, while banks with private and public capital were able to operate. The prerequisites for such a transition were created only with the adoption in mid-1991 of the Law on Banks and the Law on the Mongol Bank (on the central bank). The main direction of the reforms was the abandonment of the state monopoly, the formation of a banking system that meets the requirements of market relations and complies with generally accepted standards and norms.
Currently, the main factors determining the place of the Central Bank in the economy of Mongolia are the system of existing laws, the relationship of the measures it takes with economic policy, and the principles of interaction with the banking system. The Law on the Central Bank stipulates its complete independence in the sphere of direct activities.
So, in a short period of time, a new monetary system was created in the country, which is one of the key elements of the economic mechanism and the driving force of the market economy. Commercial banks became the main lenders and investors. Today there are 16 commercial banks operating in Mongolia, their total declared authorized capital as of January 1, 1999 amounted to 24.4 billion tugriks, i.e. 40% more than in 1994. Naturally, the Central Bank (Mongolbank) occupies a leading position in the country's banking system. It develops the main directions of monetary policy and determines the specific tasks that must be solved in the coming year.
Throughout the entire period of transition to a market economy, financial stabilization is a priority of monetary policy. If before 1996 the achievement of this goal was associated primarily with anti-inflationary measures, then at the present stage the problems of maintaining economic growth and creating conditions for investment activity are coming to the fore. At the same time, thanks to the implementation of relatively tight monetary and budget policies, it was possible to reverse the negative trends in the economy and keep inflation and the exchange rate under control. As a result, after a sharp decline in production that lasted four years, growth resumed in 1994. In particular, GDP began to increase, which in 1995 amounted to 6.3%, in 1996 - 2.6, in 1997 - 3.3, in 1998 - 3.5%. At the same time, there was a tendency to reduce the rate of price growth. If in 1992, at the very peak of inflation, its index reached 325%, then in the following years this area was brought under control, and in 1998 it was only 6%.
Despite the generally positive nature of economic development, in Mongolia, in my opinion, there is still a threat of inflationary surges due to a decline in production in some industries, dependence on imports, a large budget deficit, as well as the growth of unresolved social problems in society. Because of this, Mongolbank continues to face the challenges of ensuring the stability of the national currency, restructuring the banking system and maintaining macroeconomic stability.
The most difficult elements of the reforms were the reorganization of the currency system and the liberalization of foreign trade. Its small size and over-reliance on imports made the Mongolian economy particularly sensitive to changes in the value of the tugrik. In this area, the Central Bank and the government were faced with a dilemma: to accept a flexible or fixed exchange rate.
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Agriculture and livestock farming have historically been considered the basis. The lands of this state, located in the south-eastern part of Asia, are rich in vast deposits of natural resources. The Mongols mine copper, coal, tin and gold. The mining industry in Mongolia accounts for a significant government economic sector, but the extraction of raw materials is not the only industry in which the country's population is involved.
Economic history
The history of industry in Mongolia dates back to 1924, the year of the proclamation of the Mongolian People's Republic. Before this period, there was neither industry nor such a thing as a working class. All the population did was processing livestock products, including tanning leather, sheepskin, felt rolling, blacksmithing and carpentry. These types of production had artisanal features and were aimed at serving the on-farm needs of the local population. Manual production was represented by enterprises for the primary processing of wool and leather, carpentry, plumbing, blacksmithing and other workshops.
The only industry in Mongolia at that time was the coal mines in the Nalaikha tract. In some regions of the country, foreigners were illegally mining gold and precious metals.
In the first half of the last century, the Asian state was completely dependent on the import of industrial goods from abroad. That is why one of the primary tasks of the government of the republic was the creation of its own industrial enterprises. The young and economically immature state faced two problems: the lack of qualified personnel and material resources. The Soviet Union provided assistance in resolving these issues.
Industrial Development Period
At the first stages, the formation of the light and food industries of Mongolia began. The foundation of the modern energy sector of the economy was laid by the young republic of that time. Back in the 20s, widespread construction of processing plants began. In 1933, a brick, sawmill and mechanical plant began operating in Ulaanbaatar, and the first power plant was opened.
It is quite difficult to briefly describe the industry of Mongolia. The progressive development of the light and food sectors of the economy required a fuel and energy industry that could meet the pace of production growth. The coal industry of Mongolia has made a certain leap in development. Most of the coal mines in Nalaikha were expanded and mechanized, and the development of new deposits began in the area of Under-Khane, Yugotzyrya, and Sain-Shande. Mongolia's coal industry largely satisfied domestic demand for solid fuel. In particular, local coal was used at the unified power plant of Ulaanbaatar in 1939 and at small power plants.
During the same period, another specialization of Mongolian industry arose - metalworking enterprises, including an iron foundry. One by one, printing and paper factories and enterprises specializing in the production of building materials, gold processing, etc. were built.
Mongolia today
After the collapse of the USSR, aid from the Soviet republics, which accounted for almost a third of external GDP, stopped flowing, leading to a prolonged decline in Mongolia's economy. Industries needed radical economic reforms.
The government of the country has adopted a new course in the development of the country, aimed at building a market economy. During the reforms, a number of radical decisions were made in most areas of the national economy. The state has ceased to control the pricing process. By liberalizing domestic and foreign economic activity, attempts were made to rebuild the banking system and the energy sector; programs for the privatization of land and the implementation of measures to attract foreign investment were developed and adopted. Mongolia participate in international tenders.
However, the reform process was stalled as a result of resistance from the communist movement and political instability caused by frequent changes of governments.
The peak of the economic crisis came in 1996 after a series of natural disasters and a fall in world prices for copper and cashmere. But despite this, the very next year, 1997, was recognized as the year of economic growth of the country. That same year, Mongolia became a full member of the WTO. And although Russia’s decision to ban the export of oil and petroleum products in 1999 had the most unfavorable impact on the state of Mongolia’s economy, the country continued to move forward with confident steps.
Since 1999, by decision of the WTO, partner countries have annually provided financial assistance to this young and promising state: China, Russia, South Korea, Japan. And although economic indicators and the degree of industrial development in Mongolia can hardly be called advanced, many experts consider the economy of this country to be the most progressive in the whole world. In their opinion, the state’s potential is enormous, given the reserves of mineral raw materials, the development of which is still at an early stage.
The basis of industry: natural and labor resources
Despite the many deposits of valuable mineral raw materials, their development is not being fully developed due to numerous restrictions. In Mongolia, brown coal is mined in four deposits, and in the southern part of the country, in the Taban Tolgoi mountain range, hard coal deposits have been discovered. According to preliminary data, geological reserves amount to billions of tons. Active development of small tungsten subsoil and areas rich in fluorspar is underway. The discovery of copper-molybdenum ores on Mount Erdenetiin-ovoo served as the basis for the creation of a mining and processing plant, around which the industrial town of Erdenet is located.
The oil industry of Mongolia has been actively developing since the middle of the last century. One of the main enterprises in this industry is the oil refinery in Sain Shanda, a city located near the border with China.
Massive deposits of phosphorites were discovered near Lake Khubsugul. However, today the development of the field was suspended, without even allowing it to develop fully due to environmental hazards. It is known that zeolites accumulate in the bowels of the earth; Mongolia searched for this material jointly with the USSR. However, today the extraction of these aluminosilicate group minerals, used in agriculture for biostimulation processes and adsorption, is practically not carried out due to lack of funding.
The development of any Mongolia depends on labor resources. The population as of 2018 is 3.119 million people, of which approximately a third are citizens of working age. Part of the population (about 40%) is employed in agriculture, in industry in Mongolia - about 20%. The rest of the population works in the service sector, is engaged in private entrepreneurship and housekeeping. The unemployment rate is at 9%.
Food production
Briefly about the industry of Mongolia, which meets the food needs of the population, we can say this: this sector of the economy accounts for about 40% of total production. The production of dairy and meat products is actively developing in this industry. Numerous oil factories and separator stations were built in small settlements (aimags). It is worth noting that just a few decades ago Mongolia could not even count on the production of commercial butter. Today it is one of the major export positions.
The main ingredient for the food industry in Mongolia is milk. There is a dairy plant in Ulaanbaatar that processes tens of tons of milk and cream per day. All production processes at this enterprise have long been automated and mechanized. The capital's dairy plant produces pasteurized dairy and fermented milk products, butter, cottage cheese, sweet glazed cheese curds, and ice cream. This enterprise is a leading food processing plant in Mongolia.
Not far from Ulaanbaatar there is a large meat processing plant, equipped with modern technology, thanks to which the plant’s workshops demonstrate high production results. The meat processing plant complex includes workshops for processing meat products, departments for the production of semi-finished products, sausages, and canned food. The majority of goods from the meat processing industry are exported to other countries.
In addition to meat and dairy production, the food industry in Mongolia is represented by dairy, confectionery, bakery, liquor, fishing and other industries. Several years ago, a new direction in the food industry began to rapidly develop in the republic - flour milling. Today, the country meets the needs of its citizens for flour through the products of national producers. In addition to the mill plant in Ulaanbaatar, which produces more than 30 thousand tons of flour annually, there are a number of mechanized flour mills in aimags.
Industrial plant in Ulaanbaatar
Among the light industry factories in Mongolia, it is necessary to first of all note the industrial plant in the capital - this is one of the largest enterprises engaged in processing agricultural products. The industrial plant in Ulaanbaatar was built in 1934. Subsequently, this enterprise began to be called a forge of professional industrial personnel of the times of socialism. The industrial complex consists of a complex of plants and factories equipped with modern equipment. There are wool washing, cloth, worsted, felting, shoe, saddlery and textile workshops. The Ulaanbaatar industrial plant also includes in its structure cherry, chrome, sheepskin and fur, tanning and other factories. The main products produced by the plant:
- various woolen fabrics;
- felt;
- drape;
- cloth;
- shoes for all seasons;
- felt boots;
- camel wool blankets;
- bags;
- outerwear.
The plant’s products are in demand not only within the country, they are exported to other countries. The industrial plant strives to expand its production area. As this holding developed, its individual workshops long ago acquired the status of independent enterprises.
Progress in heavy industries
Over the past years, the country has seen positive dynamics in the development of energy, coal, oil, metalworking, mining, construction, woodworking and other production sectors. Average annual growth rates exceed similar figures in other former socialist republics. The rate of industrial growth in Mongolia surprises many economic experts, since this country, which was not so long ago considered the most backward, is steadily approaching the level of advanced powers.
In order to develop the main sectors of the national economy, the Mongols are striving to bring industrial production to a new level that corresponds to the world average. The country's government pays special attention to the creation and establishment of its own chemical, pharmaceutical, and biological production, which plays a huge role in expanding the main sector of the economy - livestock and agriculture in Mongolia. Industry, as already noted, employs approximately 20% of the working population, while almost 40% of the working population is engaged in raising livestock, farming, and growing crops.
Industrialization of Mongolian cities and development of the coal industry
Briefly about the specializations and industries of Mongolia, which form the basis of the fuel and energy block of the country's economy, we can say that they are fundamental in the development of the national economy. Republic occupies the main place in this segment. Today, brown and hard coal are mined in Mongolia at 13 large deposits. The most popular products for export are coking and high-grade coal, which is mined in the Nalaykha region near Ulaanbaatar.
In the coal basin of certain regions of Mongolia, in particular in the aimags of Uverkhangai and Sukhbaatar, operating mines fully satisfy the need for solid fuel not only in their settlements, but also in some neighboring ones. Not long ago, new coal mines were put into operation and old enterprises were equipped with new equipment. This step naturally led to an increase in average annual production rates by more than 10-15%.
Along with coal deposits, during the development of deposits, natural reserves of ores, asbestos, limestone and other valuable raw materials are often discovered. Darkhan-Uul is considered one of the rapidly developing industrial centers today. Here, within the Sharyn-Gol coal basin, an industrial and energy complex is being built that will provide coal to all areas of the national economy and the needs of the population. That is why the city of Darkhan-Uul is called the “flower of friendship” by the Mongols. In the construction of this complex, significant assistance to the republic is provided by the countries of the former USSR (Russia, Kazakhstan), China, Japan, and Canada. The main objects of the complex should be several large coal mining enterprises, a railway transport hub, a high-voltage power line and an elevator. Today, the process of the emergence of another economic and cultural center of Mongolia is taking place here.
Oil production, electricity production
As the fuel base and industrial sectors in general grow, the production of electrical energy has to be taken to a new level. Just a few decades ago, electricity was not even heard of in remote regions. Today, the need for electrification is explained not only by the everyday needs of the population, but primarily by the need to mechanize and automate production in the country and increase the performance of finished products. Local power substations operate in aimak centers.
Unlike other industrial sectors, oil refining is a relatively young specialization in the industry of Mongolia. The industry is still in its infancy, but the country produces half of the gasoline for its own needs, and imports the rest.
The only major oil refining center is in the Eastern Gobi. Not long ago, a young city appeared here - Dzunbayan, which also houses infrastructure and cultural facilities. The Eastern Gobi meets almost half of Mongolia's fuel needs.
Due to the expansion of the manufacturing and manufacturing industries, electricity costs in Mongolia are increasing every year, which prompts the government to consider the construction of new thermal power plants.
Mining of mineral ores and metals
The mining industry provides Mongolia with:
- gold;
- manganese;
- tungsten;
- magnetic iron ore;
- lead ores;
- rock crystal;
- turquoise and other non-ferrous, precious metals;
- salt.
Mining and processing enterprises are being built near the sites of large deposits. Mongolia exports tungsten and certain types of non-ferrous metals to other countries. Ferrous metallurgy in Mongolia is represented by a mechanical processing plant with an iron foundry in Ulaanbaatar. Agricultural equipment, hand tools, and small equipment are produced here for domestic and export sale.
Marble, limestone, asbestos, gypsum, and mineral paints are mined in the republic. The extraction of this type of raw material makes it possible to develop the industrial construction materials industry. Over the past few years, several dozen enterprises have been commissioned, including a house-building plant in Sukhbaatar. They are engaged in the production of lime, cement, bricks, slate and other construction products. The large-panel house-building plant in the capital of Mongolia, the glass factory in Nalaikh, and the reinforced concrete and brick factories in Ulaanbaatar deserve special attention. The workshops use complex mechanized technologies. All enterprises are equipped with modern technology.
The production of building materials and their sale to the public at an affordable price is an important aspect for a people who in the recent past were considered nomadic. The transition of the Mongols to sedentism is facilitated by the large-scale construction of comfortable houses, infrastructure facilities, and the development of a public transport network in cities and aimags.
Agricultural economy
The Ministry of Agriculture and Light Industry of Mongolia is doing everything to support the agricultural sector of the economy and create the most favorable conditions for its development. Agriculture has been the basis of its economy throughout the history of this state. In the context of the transition to a market model, the importance of the agricultural sector has not decreased. Almost half of Mongolia’s labor reserve is involved in it, although 50-60 years ago this figure reached 80%. Agriculture provides more than 40% of total GDP. The Mongols rank third in the world in terms of livestock per capita, behind Australia and New Zealand.
Almost until the middle of the last century, while industry was going through the process of formation and transformation into an independent sphere, agriculture remained the only production sector. Even in those days, finished products were exported, which made it possible to receive almost 60% of the national income. Over time, this share has decreased and today is about 35-40%, with more than half of export products being raw materials.
The most important economic indicators in this country depend on the level and pace of development of agriculture. In particular, the costs of agricultural raw materials are the main part of the costs of producing goods in the light and food industries. The Ministry of Agriculture of Mongolia is constantly working to create new concepts and techniques that would minimize costs and increase the productivity of finished products.
Pastoralism is the predominant economic activity practiced by Mongols. According to some reports, there are 12 heads of livestock per person here. In some aimags, livestock is a conventional monetary unit in transactions of a material nature. Unlike livestock raising, agriculture plays a secondary role in modern Mongolia.
Completion
The development of industry led to the formation of the working class according to the model of the USSR proletariat. In the process of training specialized workers, the participation of the Soviet Union played an important role. Some Mongols gained experience and knowledge by working at their enterprises under the supervision of sent Soviet craftsmen. They were trained in special clubs, technical sections, and training centers. Others received their education directly in the USSR. Thus, Mongolia is an example of a national desire for the economic prosperity of its country through industrial development, rationalization of production processes and conservation of resources.
