Natural Resources And Mongolian Economic Growth

Mongolia is rich natural resource country, and it possesses abundantmineral resources of80different minerals including copper, gold, cokingcoal, iron ore, fluorspar, molybdenum. The largest income comes from copper,coal and gold. Its many areas are still not explored. As expected, Mongolianeconomy has relied on the mining sector and the high prices of mineralproducts export in the international market. Mongolian real GDP growth isexpected to be an average over15%a year for the following3years.A large number of empirical studies have shown that resource-richcountries have performed poorly in terms of growth compared toresource-poor countries. This negative relationship between naturalresource and economic growth is known as the natural resources curse.However, there are many examples of high developed and developing countries,with resource rich and avoiding from Dutch disease: USA, Austria, Norway,Chile, Brazil, Indonesia and Botswana.Based on related theories, this dissertation sets a goal to identifythe relationship between natural resource endowments and economic growthof Mongolian, at two levels of country and province, and to explore theimpact of natural resources on economic growth of Mongolia as well as themechanism of action. On this basis of Mongolia’s effect, how to use naturalresources, to avoid falling into the resource curse and minimize theeconomic, social and political risks in Mongolia.Resources dependency intensifies Mongolian economy risks. From thecountry level, Mongolia’s mining industry has been continuously expanded,approximately80%of the foreign direct investment flows into the miningindustry, and the mining sector export revenue has grown by62-75%. The mining sector makes up nearly20%of the total GDP of Mongolia, thenon-trade sector has been rapidly grown, the manufacturing and othersectors growth has been comparatively slow, the mineral sector employmentand wages has rising sharply. Mongolian economy has been showing signs of"Dutch disease". Since Mongolia’s economic dependence on resources,Mongolia’s real GDP is influenced by international market prices ofresources; the risk of the country’s external shocks has been increased.In addition, with the development of the mining industry, Mongoliainstitutional quality is deteriorating. From the province level, thedissertation performed detailed analysis of the abundant natural resourcesimpact on the regional economic, especially the GDP, residents income,industry structure, for example, the two resource-abundant areas of OrkhonProvince and Umnugovi province. It can be seen Mongolian regional economyis highly dependent from resources. To avoid the from falling into the trapof "resource curse", Mongolia needs to learn from the experience of somecountries, and then reduce the impact of the Dutch disease, and implementthe right policies at the national level and regional level.The dissertation consists of five chapters.The first chapter is related theory and literature review. In the heremain related concepts explained, and elaborated theoretical basis ofnatural resources effect on economic growth, and related literature revieware summarized.The second chapter is Mongolia’s natural resource endowment and itsexploitation. In this chapter, Mongolia’s natural resource reserves andregional distribution, its exploitation and trade of natural resources,the natural resources industry reform and development is presented, andresearched related natural resources policy and development strategy.The third chapter is abundant natural resources impact on the Mongolian economy. The chapter considers detailed analysis of the domestic economy,the labor market, the foreign economic system, and institutions, in fourareas of the natural resources impacts on the Mongolian economy.The forth chapter is Mongolian resource abundant region’s economicgrowth. Orkhon Province and Umnugovi province, two provinces are exampleof abundant resources regions. The chapter focuses detailed analysis ofthe abundant natural resources impact on the regional economic, especiallythe GDP, the residents income and industry structure.The fifth chapter is conclusions and policy recommendations. In thechapter, the dissertation’s conclusions are summarized, and suggestedrelated countermeasures, Mongolia should be taken in order to avoid theresource curse, at the country level and regional level.