Mongolia - Sources of Growth : Country Economic Report

This economic report aims to inform the ongoing debate on the Government's long term development priorities in Mongolia. It discusses the key facts and potential implications the government would need to consider when determining its public spending, public investment program, fiscal space, and borrowing strategy going forward. The report begins by reviewing the Mongolian growth experience over the 1990s as a pre-requisite to understand the present endowments, and the circumstances under which one needs to think about the future. Chapter 2 applies the "growth diagnostics" approach to identify those factors that are "binding" constraints to growth and are areas in need of immediate policy interventions by the government. Chapter 3 discusses the issues that will need to be addressed in order to develop non-mining sector activities with the aim of economic and export diversification and suggests policies to encourage firm innovation'' and private sector growth. Chapter 4 discusses policies to relax infrastructure bottlenecks in the context of regional development and Mongolia's unique geography. Chapter 5 presents a menu of policies tailored to address the mismatch of skills workers bring to the market and those demanded by the market. Chapter 6 discusses issues related to appropriate management and development of its mineral wealth, as well as those arising from present practices in the livestock sector. Finally, in Chapter 7, the possibilities of governance failure, policy and other risks are analyzed to demonstrate their inhibiting effects on the achievement of much higher long-term growth rates in this natural resource dependant economy during a commodity price boom.