зохиогчийн эрхээр хамгаалагдана.


1. Economic situation of Mongolia on the eve of 1921 revolution. 2-Economic activities that started in 1920s, 3-Economic reforms that started in 1986, 4-Destructions or  "Economic shock therapy that started in early 1990s 5-The current economic situation:

1.Economic situation in Mongolia on the eve of 1921 revolution which marked the end the 220-year Manchu-Chinese rule and the 2-year Chinese occupation. Mongoalia had predominantly a poor nomadic economy by the beginning of the XX century. Farming and industry were almost nonexistent; transportation and communications were primitive; banking, services and trade were almost exclusively in the hands of foreigners, overwelmingly of the Chinese. Most of the people were very poor and they were either illiterate nomadic herders or monks. Property in the form of livestock was owned primarily by aristocrats and monasteries; ownership of the remaining sectors of the economy was dominated by foreigners. Mongolia's new rulers thus were faced with a daunting task in building a modern, socialist economy.

2. Economic activity in Mongolia during socialism that started 1920s has been based on the breeding of livestock, copper mining, agriculture and light industry. Mongolia also has extensive mineral deposits: copper, coal, molybdenum, tin, tungsten, and gold account for a large part of industrial production. Mongolia commenced its planned economy with the Five-Year Plan for 1931-35, which set unrealistically high targets for production and called for the collectivization of agricultural production. This plan was abandoned in 1932 in the face of widespread resistance to collectivization and the failure to meet production goals. Annual planning was introduced in 1941 in an effort to deal with wartime shortages. Five-year plans were reintroduced in 1948 with the First Plan. The Second Five-Year Plan (1953-57) was followed by the Three-Year Plan (1958-60). Regular five-year plans were resumed with the Third Five-Year Plan (1961-65), and they have continued to be used since then.

Mongolia's five-year plans have been coordinated with those of the Soviet Union since 1961 and with Comecon multilateral five-year plans since 1976. Annual plan coordination with the Soviet Union, which is made official in signed protocols, began in 1971. Mongolian planners were trained by Soviet planners and cooperated with them in drafting long-term plans, such as the General Scheme for the Development and Location of the Mongolian People's Republic Productive Forces up to 1990, produced in the late 1970s; and the Longterm Program for the Development of Economic, Scientific, and Technical Cooperation Between the Mongolian People' Republic and the USSR for the Period up to 2000, signed in 1985.

National economic plans included general development goals as well as specific targets and quotas for agriculture, capital construction and investment, domestic and foreign trade, industry, labor resources and wages, retail sales and services, telecommunications, and transportation. The plans also focused on such social development goals and targets as improved living standards, population increase, cultural development, and scientific and technical development.

3. Economic reforms that started in 1986 was influenced by Gorbachev’s perestroika-reform policies in U.S.S.R. Mongolia's socialist government started its own economic reforms aimed to gradual transition to a market economy. Meusures were taken for:acceleration of development; application of science and technology to production; reform of management and planning; greater independence of enterprises; and a balance of individual, collective, and societal interests. More than 100 enterprises began experimenting with financial autonomy (before then, enterprises operating with a deficit had been subsidized by the state). Enterprises were accountable for their own losses, and they were responsible for fulfilling sales contracts and export orders. Beginning in late 1986, state farms and negdels/units of nomads/ were eligible for state payments for output exceeding the annual average growth rate for the previous five-year plan. Individual agricultural cooperative members and workers were allowed increasing numbers of privately held livestock. In 1987 the government began encouraging the formation of voluntary labor associations, auxiliary farms, and sideline production attached to enterprises, schools, and so forth to increase production of foodstuffs and consumer goods, to engage in primary processing of agricultural goods, and to provide services.The authorities permitted the formation of individual and family-based cooperatives; by 1988 there were 480 such cooperatives. The former U.S.S.R. also served as the primary market for Mongolian industry. In the 1980s, 's industrial sector became increasingly important. The draft law on state enterprises, presented to the People's Great Hural in December 1988, was to extend greater independence in economic matters to all state enterprises and to lead to an economy that combined planning and market mechanisms. Under provisions of the draft law, state enterprises were to be authorized to make their own annual and five-year plans and to negotiate with state and local authorities to pay taxes based on long-term quotas. State enterprises also were to sell output exceeding state orders and unused assets; to establish their own, or to cooperate with existing, scientific organizations to solve scientific and technical problems; to be financially responsible for losses, and to pay back bank loans; to set prices independently; to establish wage rates based on enterprise profitability; to purchase materials and goods from individuals, collectives, state distribution organizations, and wholesale trade enterprises; to establish direct ties with foreign economic organizations; to manage their own foreign currency; and to conduct foreign trade.

The draft law stipulated that enterprises were to be divided into two categories. National enterprises were to be the responsibility of ministries, state committees, and departments; local enterprises were to be supervised by executive committees of aymag and city administrations or members of local hurals. State and local bodies were not to interfere in the day-to-day decision making of enterprises, but they were responsible for ensuring that enterprises obeyed the law and that they did not suppress the interests of society. Enterprises were allowed to form three kinds of associations: production associations, scientific production associations, and enterprise associations to coordinate economic affairs. Finally, the draft law said that the state was the owner of state enterprises and that the labor collective was the lawful manager of a state enterprise. The labor collective was to elect a labor collective council, which was to ensure that the enterprise director (who acted on behalf of the collective and the state) met the interests of the collective in managing the enterprise. It was unclear how the relationship between the enterprise director and the labor collective would work out in practice.

By 1989, it accounted for an estimated 34% of material products, compared to 18% from agriculture. However, minerals, animals, and animal-derived products still constitute a large proportion of the country's exports. Principal imports included machinery, petroleum, cloth, and building materials. Prior to 1991, 80% of 's trade was with the former Soviet Union , and 15% was with other Council for Mutual Economic Assistance(CMEA) countries. was heavily dependent upon the former Soviet Union for fuel, medicine, and spare parts for its factories and power plants. In 1985, a reported 18.3 percent of produced national income was derived from agriculture, 32.4 percent from industry, 4.9 percent from construction, 11.2 percent from transportation and communications, 31.6 percent from domestic trade and services, and 1.6 percent from other sectors.In the late 1980s, the government began to improve links with non socialist Asia and the West, and a tourism sector developed. As of January 1, 1991, and the former Soviet Union agreed to conduct bilateral trade in hard currency at world prices.

4. Destructions or Economic shock therapy of 1990s: Mongolia was forced to abandon it’s policy of gradual transition to market economy and take the economic shock therapy which started after large demonstrations of 1989 and 1990. Most foreign experts tried to impose their own model of development and Mongolia's new rulers start blindly following them and in many cases intentionally exaggerating or corrupting them. The economic shock therapy in Mongolia proved to be disastrous. ll-prepared , instant privatization ruined the country’s industry, construction and other vital fields of the economy. Many properties were seized by nomenklatura and new-born "democrats". No jobs were created and as its consequence poverty increased dramatically.

The government privatized the national herd of 24 mln.lifestock abandoning in one swoop the established collective herding system. Vetenirarians lost their jobs, carefully chosen animals for  top-quality breeding dispersed among numerous families.

The Mongols and the foreigners were put at very unfair starting points in their businesses in Mongolia. The newly adopted Foreign Investment Law exluded the foreigners from paying customs and income taxes for first 5 years of operation while newly forming mongol businesses had to pay heavy taxes. Why this discrimination against the Mongols in Mongolia was imposed for ?!

In August and September 1999, the economy suffered from a temporary Russian ban on exports of oil and oil products. Mongolia joined the World Trade Organization(WTO) in 1997. The international donor community pledged over $300 million per year at the last Consultative Group Meeting, held in Ulaanbaatar in June 1999.

Between 1990 and 1993, Mongolia suffered triple-digit inflation, rising unemployment, shortages of basic goods, and food rationing. During that period, economic output contracted by one-third. As market reforms and private enterprise took hold, economic growth began again in 1994-95. Unfortunately, since this growth was fueled in part by over-allocation of bank credit, especially to the remaining state-owned enterprises, economic growth was accompanied by a severe weakening of the banking sector. GDP grew by about 6% in 1995, thanks largely to a boom in copper prices. Average real economic growth leveled off to about 3.5% in 1996-99 due to the Asian financial crisis, the collapse of the Russian ruble in mid-1998, and worsening commodity prices, especially copper and gold.In August and September 1999, the economy suffered from a temporary Russian ban on exports of oil and oil products. Mongolia joined the World Trade Organization(WTO) in 1997. The international donor community pledged over $300 million per year at the last Consultative Group Meeting, held in Ulaanbaatar in June 1999.

Mongolia's GDP growth fell from 3.2% in 1999 to 1.3% in 2000. The disappointing results can be attributed to the loss of 2.4 million livestock in bad weather and natural disasters in 2000. Prospects for development outside the traditional reliance on nomadic, livestock-based agriculture are constrained by Mongolia's landlocked location and lack of basic infrastructure. Mongolia's best hope for accelerated growth is to attract more foreign investment. Since 1990, more than 1,500 foreign companies from 61 countries have invested a total of $338.3 million in Mongolia. Many believe this number could be dramatically increased if the vague 1993 foreign investment law were rewritten to provide investors with more confidence that their investments would be.

5. The current economic situation:On the whole, the nation's economy is still raw material and mineral based.