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Mines and Minds : Leveraging Natural Wealth to Invest in People and Institutions (Mongolian)

Mines represent Mongolia’s present, while minds - broadly defined to include people and institutions - are its future. Current policies are excessively focused on preserving the mining-driven prosperity at the risk of future stagnation. Such complacency is ill-timed when climate change concerns and the COVID-19 shock require an acceleration of structural transformation. Mongolia faces deep-rooted, interrelated challenges: macroeconomic policy mistakes have amplified external shocks, an oligopolistic ownership structure and limited competition have led firms to become more inward-looking and less inclined to innovate, and gross underutilization of human capital - evident by an unprecedented exodus of young and educated workers to foreign countries - has eroded the foundation of a diversified economy. Breaking this gridlock calls for a shift in approach that weighs the well-being of future generations as much as the welfare of the current one - the Golden Rule that Phelps (1961) has long advocated. Specifically, macroeconomic policies should aim to smooth consumption over the business cycle and mitigate the corrosive impacts of the resource curse (World Bank 2014). Second, microeconomic reforms should focus on enhancing competition, securing investor rights, and lowering the barriers to entry. Third, the country needs to diversify its endowments, and especially better utilize its skilled and female workers. Finally, there is an urgent need to reduce political interference, increase transparency, and improve regulatory quality throughout the economy.


  • Author

    Nganou,Jean-Pascal, Eckardt,Sebastian, Batsuuri,Davaadalai, Batmunkh,Undral, D'Hulster,Katia

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  • Document Type

    Country Economic Memorandum

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  • Country


  • Region

    East Asia and Pacific,

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  • Doc Name

    Mines and Minds : Leveraging Natural Wealth to Invest in People and Institutions

  • Keywords

    female labor force participation; energy information administration; small and medium enterprise; increase in income inequality; extractive industry transparency initiative; public investment program; mineral revenue; Exchange Rates; sovereign wealth fund; Computable General Equilibrium; commodity price volatility; financial sector specialist; Rule of Law; skilled human capital; social assistance system; private capital stock; real exchange rate; barrier to entry; return to education; response mechanism; purchasing power parity; global financial crisis; external affairs; senior education specialist; public sector specialist; random effects model; control of corruption; natural capital account; Exchange rate policies; exchange rate policy; total public debt; privileges and immunity; official poverty line; public spending pattern; public sector debt; commodity price swings; commodity price shock; productivity growth; recent years; social transfer; Macroeconomic Policy; mineral output; labor productivity; policy priority; Clean Energy; general elections; fiscal balance; external shock; social capital; Mining; natural wealth; consumption growth; extreme poverty; net saving; fiscal management; Macroeconomic Management; mineral wealth; mineral rent; external borrowing; large-scale mining; regulatory quality; political interference; investor right; Resource Curse; business cycle; ownership structure; economic crisis; resource rent; coal consumption; fiscal rule; macroeconomic volatility; commodity exporter; future earnings; Social Protection; tax deposit; comparative advantage; royalty tax; Boosting Growth; limited competition; female workers; foreign country; mining revenue; transfer transfer; value chain; Industrial Policy; stranded asset; put pressure; debt fund; transferred fund; Industrial Policies; government investment; global standard; foreign exchange; income density; governance reform; inequality index; copper mine; fiscal outcome; political will; investment climate; country infrastructure; business environment; Labor Market; mineral export; production process; long-term competitiveness; macroeconomic environment; diversified development; conceptual framework; capital accumulation; paying job; equal footing; saving rate; rural area; monetary policy; fiscal council; stabilization fund; current consumption; global commodity; output volatility; corruption control; Business Climate; output growth; government spending; competition framework; energy generation; ownership concentration; financing constraint; government capital; regulatory burden; youth employment; debt level; asset diversification; Natural Resources; Product Diversification; product diversity; policy shock; high volatility; factor accumulation; Technology Diffusion; marginal effect; bank profitability; coal demand; wage growth



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Nganou,Jean-Pascal Eckardt,Sebastian Batsuuri,Davaadalai Batmunkh,Undral D'Hulster,Katia

Mines and Minds : Leveraging Natural Wealth to Invest in People and Institutions (Mongolian). Washington, D.C. : World Bank Group.