Mongolia: The Economically Emerging Nation

The land feared by many because of their aggressive horseback riding nomadic warriors led by the great Mongol Emperor Genghis Khan back in 13th Century which nearly occupied the most of central Asia has gone through several economic reforms past few years.

This landlocked country, sandwiched between People’s Republic of China and Russia, has a population of approximately of about 2,736,800. The country popular for its nomadic population where the per capita income of approximately $3,300(2010 est.) has moved from state controlled economy to free market economy after the downfall of Soviet Union.

Although, this landlocked nation situated in the steppes with only one trading partner, China, which received three fourths of Mongolia’s exports where most of the trades was controlled by China is now trying to reduce its dependence on the Chinese Market.

With its vast mining resources, Mongolia has projected itself as an emerging market in the mining industry among other Central Asian states. “In October 2009, the government passed long-awaited legislation on an investment agreement to develop Mongolia’s Oyu Tolgoi mine, considered to be one of the world’s largest untapped copper deposits” (CIA factbook).

However, for this emerging nation one of the biggest hurdles in its mining development has been lack of proper infrastructure, namely transportation. To overcome this development issue and develop its mining industry, Mongolian Government has recently set up a Development Bank under the supervision of Development Bank of Korea and Development Bank of Japan.

The reason behind this establishment is to improve its railway network to open up its vast mining resources thereby creating job market for the local unemployed population. With an aim to attract foreign investments, the Development Bank of Mongolia has planned to issue 800bn (in Tugriks) government bonds, which is equivalent to US $700,000,000, to build its railway industry to further explore the mining area. The bonds being issued are rated “B1 by Moody’s which is below the investment grade.”

However, with rising foreign investment, recent contract with US and Japan Government to establish a newer international airport and development of the mining industry, Mongolian government expects that the average Mongolian is expected to become wealthier than the average Shanghainese by 2014 due to a proposed sharing of equity to all Mongolian nationals in state-owned assets due to be privatized at that time.

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