Mongolia’s inevitable future: innovation or pressure

As we are well aware the Mongolian economy is growing, mining operations are expanding, foreign investments are more than ever before, tourism and domestic industrial production is expected to boom in the next several years and just about everything in Mongolia is increasing – including poverty.

Delegates from both the Mongolia Economic Forum and Coal Mongolia 2012 have emphasized that Mongolia’s future is to be decided if the correct and crucial decisions we make today, right now. Mining will serve as the foundation for all the other industries in the country. Today, the mining sector is developing smoothly and happily with Government policies struggling to catch up.

But what does all this mean for us? If we succeed in fully developing our industry and once we have an independent economy with stable exports, how will Mongolia look in the future? Will our economy be that independent as we expect?

It may be a bit far fetched to find Mongolia a nuclear missile-armed world power in the future and it would also be insulting to today’s Mongolian Government to say that it will end up a poor country having not effectively used its mineral resources. 

Let’s look at the most plausible and favorable picture of Mongolia in the near future. 

Mineral resource exports are steady, and because of its close proximity and obvious high-energy resource demand, China will be the number one importer of Mongolian minerals. Mongolia is the number one producer of cashmere products in the world, with prominent brands that are well known.

With great history, unique nomadic culture and beautiful natural scenery, Mongolia is a perfect tourist destination. Mongolia has numerous wind farms planned to take advantage of the deserted steppes and grasslands for energy production. 

The society will have improved much, too – universities will be more efficient and respected than today, the healthcare system will be much more advanced, where Mongolians will no longer have to travel to Korea, Japan or China, or even the US to have surgeries done.

The Mongolian economy may change to whatever comes, but is ultimately limited by one fact that will not change: Mongolia is located between Russia and China, two of the world’s greatest economies. 

As the Mongolian economy soars, its relationship with its two neighbors will surely turn sour. Russia is satisfied with the fact that Mongolia turns to them for fuel while China knows that Mongolia cannot go on without their constant supply of cash in exchange for Mongolian coal, copper, gold, and other minerals. 

When I talked merrily about the future, I have crudely omitted the presence of China and Russia’s economic and political influence. No matter what Mongolia does, unless Russia or China decides to move to another continent, the Mongolian economy will never surpass that of its neighboring two countries. This is because of the simple economic factors of lack of transportation and supply and demand. 

Mongolia is the second largest landlocked country on earth, with no sea exits. The only viable option for Mongolia will be China or Russia, meaning that Mongolia will still be dependent on these two countries. On top of this, Mongolia has its own importation needs, which consist of nearly all of Chinese products. 

As for Russia, Mongolia exports a few name products and also imports most of daily needed products from there. This situation will be so in the future however Mongolia’s economy grows. 

What are possible solutions to this? We may propose a number of solutions to this, but none of them will ultimately remove our dependency on our neighbors because of our imports.

The ultimate solution is innovation and technology. Japan, Korea, Germany, and the US have monopoly over most of the world’s high end technologies in software, hardware, methodology and even space explorations, and the world look up to them for new ones. This could be unlikely for Mongolia, but if Mongolia can perhaps invent a technology that is only unique and belong to Mongolia, the land of blue skies may become as independent as it can. 

The Mongolian Government has always been aware of this situation and has held a clever foreign policy, making sure to keep both the nations happy while also fulfilling Mongolia’s interests. Today, the Government is getting serious on reducing dependency on the two nations, with industrial complexes in construction, and seeking other nations to export mineral resources or other products to, like the exportation of coal to Japan by Mongolia Mining Corporation.

But for now and for the future, apparently, Mongolia will still be a buffer state for the two great nations, somewhat under their pressure. The best Mongolia can do is to reduce the reliance on the countries, and a completely independent Mongolian economy is all but a dream.