His Excellency Mr' Dalrain Davaasambuu - PowerPoint PPT Presentation

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His Excellency Mr' Dalrain Davaasambuu

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Presently, the Mongolian government has no official 30-year strategy. ... Dependence on small number of commodities (copper, gold, cashmere) The China Factor: ... – PowerPoint PPT presentation

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Title: His Excellency Mr' Dalrain Davaasambuu


1
His ExcellencyMr. Dalrain Davaasambuu
  • Ambassador to the United Kingdom of Mongolia
  • Mongolia in 2036 How to profit from the rise
  • of an economic superpower

2
Mongolia in 2036 How to profit from the rise of
an economic superpower
  • The ideas in this presentation are not those of
    the Mongolian government but personal thoughts
    and calculations of Mr Davaasambuu based on
    existing official statistics. Presently, the
    Mongolian government has no official 30-year
    strategy.

3
Double transition since 1990 Political and
economic reforms
  • Several changes of government since 1990. Today,
    five parties are represented in Parliament four
    parties are in the Cabinet
  • Mongolians are enjoying fundamental human rights,
    democracy and freedom of information
  • Democracy and rule of law have been achieved,
    despite a low level of economic development
    Democracy Without Prerequisites See Steven Fish
    (1998), Mongolia Democracy without
    Prerequisites, in Journal of Democracy (9) 3
    (July), 127-141.
  • Political and economic reforms occurred at the
    same time. Private sector produces gt70 of GDP
    due to the privatisation of state enterprises and
    economic reforms since the centrally planned and
    command economic model was abandoned in the early
    1990s

4
Economy now and 2036
  • Now
  • GDP xx billion
  • Per capita GDP 721
  • ƍnformal economy in of GDP 30-40
  • Population 2,6 mio.
  • Exports 950 mio.
  • Imports 1,100 mio.
  • Thirty years from now
  • 10,000
  • 5-10
  • 3,7 mio.
  • 15,000 mio.
  • 14,500 mio.

private estimate including informal economy
5
Development Basis and Strategy
  • Landlocked and vulnerable
  • Small landlocked country between two big
    neighbours
  • High economic vulnerability according to UNDP
    ranking. Dependence on small number of
    commodities (copper, gold, cashmere)
  • The China Factor
  • Few competitive advantages in manufacturing vs.
    China
  • Chinas economic rise increases demand for metals
    like copper
  • Strategy
  • Promote export oriented economy with high
    diversification (AsiaEuropeAmerica)
  • Strengthen industries with low transport costs
    that use locally available raw materials
  • Use duty-free access to EU
  • Establish status as transit country for energy
    and goods
  • Develop tourism, agriculture and produce some
    value added goods
  • Exploit Mongolias rich natural ressources with
    the help of foreign direct investment
  • Invest in infrastructure
  • Look for opportunities in knowledge-based sectors

6
A small but growing population
  • From 1950 to 1990, the population almost tripled
    to 2,7 mio. now
  • In the transition period 1989-2000, population
    growth droped to 1.4 from 2.5 in 1979-1989.
    This reflects the enormous socio-economic
    changes.
  • Estimates suggest that the Mongolian population
    will amount to 3,6 mio. in 2035
  • Research indicates that population growth will
    drop below the replacement level around 2025
    (less than 2,1 children per woman)

7
A new life for herdsmen
  • Non-intensive herding suits Mongolias natural
    conditions. Carrying capacity of the steppe
    limited to 30-40 mio. livestock
  • 10 of the population will live as herdsmen in
    2036, from 15 now. (410,000 herders then,
    370,000 now)
  • Living arrangements will converge towards
    developed nations model, for example 30 of
    herders households have TV now all will have a
    TV in 2036

8
Tourism can make a big difference
  • Tourism created 5 of Mongolias GDP in 2004
  • 25 annual increase in income from tourism over
    the past five years
  • Amount of visitors doubled to 305,000 from 2000
    to 2004
  • If Mongolia maintains a 10 annual increase over
    30 years, we will have 4 mio. visitors in
    2036 (population size)

9
Gaining from transit
  • Mongolia plays an important role for the transit
    of goods and people between China, Russia, Europe
    and Asia at large (road, air, pipelines)
  • Energy from Russia to China could go through
    Mongolia (increased by rising importance of
    renewable energy, eg hydroenergy from Russia)
  • Route for trade in goods to Russia (Provide
    related service and gain access)
  • Need to develop infrastructure and transport
    industry

10
Digging for development
  • Mongolia is rich in resources Copper, gold,
    iron, coal, phosphate etc.
  • Recent commodity price boom makes Mongolias
    future more bright and promising Foreign
    investment has started, but development of mining
    stakes takes time (15 years or more)
  • Global underinvestment in metals, despite
    megatrend of rising demand (caused by economic
    rise of China)
  • Proximity to China as a big advantage (low
    transport cost)

11
Economic impact of mining
  • Copper and gold deposits at Oyu Tolgoi, exploited
    by Canadian company Ivanhoe Mines, could start
    operation in 2-3 years
  • Over gt35 years, 15 mio. t of copper and 11 mio.
    oz. of gold
  • At 2005 prices, the value of exports from this
    mine project alone exceeds US 54 billion
  • Ivanhoe estimates 34,3 annual increase in real
    GDP and 9,3 increase in nationwide consumer
    expenditure

12
International support
  • Historically good relations to Russia, because of
    Russias role in optaining national independence
    in 1921 and supporting modernization for 70 years
  • China becomes Mongolias largest trading partner
    and source of FDI
  • Developed democracies as trading partners and
    providers of development assistance (G7 protocol
    first mentionned support for Mongolias reforms
    at 1991 London meeting)
  • US president George Bush expressed support for
    Mongolia on his visit in November 2005

13
Summary 800 years of statehood
  • In 1206, Chinggis Khan united the Mongolian
    tribes and established a Mongolian state
  • Independence in 1921
  • Successful double transition since 1990
  • Profiting from Chinas economic rise
  • In 2036, Mongolia will celebrate 830 years of
    statehood. To get an idea of what that will be
    like, please come to our country and attend the
    800-year celebrations taking place throughout
    2006.
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