Sandwiched between China and Russia (previously the Soviet Union), Mongolia had little option but to undergo its own Communist revolution when its neighbours did. Most of the huge extent of Mongolia remains, then as now, the wide open lands on which herders tend their livestock and people pursue the same nomadic lifestyles that have been handed down to them from the past. The open lands are subject to extremes of weather and life is harsh. Natural resources are generally scarce (or at least difficult to access) – although there are reports of recent finds of gold which has led to something of a gold rush – and the small urbanized areas offer very little in the way of industry or of competitive advantage. Only one railroad penetrates the land of the country, running from north to south and, passing through border points requires significant tariffs which make any attempts at international trade extremely difficult and expensive. Crucially, the country is land-locked, with no access to the sea. Research shows that there is a significant difference in the ability to obtain economic development and growth in countries which can ship their products by sea and those that cannot. The almost total lack of an urban elite or powerful entrepreneurial class are also significant problems in searching for the keys to growth.
Reports from the capital of Mongolia, Uhlan Baator, suggest that the sudden removal of Communist institutions – which collapsed following Gorbachev’s reforms – have led to the collapse of many aspects of society. Many people have fallen through the large holes in what remains of the social welfare net and have become destitute or fallen foul of predatory interests. As ever, new money has been willing to move in to a market opportunity and has not always been endowed with a social conscience. In 1992, a new constitution was followed by victory for the Communists in an election, who were replaced for a four year period by Democrats between 1996-2000 before the Communists were again returned to power. A coalition government was established in 2004 and remains in power. Neither side has really been able to get to grips with the underlying problems of the country. The country’s economic growth depends to a considerable extent upon variations in mineral commodity prices, which represent the overwhelming majority of Mongolia’s exports, while imports of oil, consumer and industrial goods trends relentlessly upwards in price. More than one third of Mongolian people remain below the poverty line.
