Lkhanaajav, Esmedekh (2016) Mongolia's resources boom: a CGE analysis. PhD thesis, Victoria University.

Abstract

Mongolia’s geographical location, its economic structure and its mineral wealth give it unique characteristics. Tapping its natural resources in a way that equally benefits the social and economic well-being of Mongolians is the greatest challenge. The resources boom in recent years directly impacted remarkable economic growth, and affected Mongolia’s economic structure, social welfare, institutional quality and environment. The unprecedented improvement in the terms of trade and the large inflow of foreign direct investment (FDI) were driven by the industrialisation of Mongolia’s neighbour and a main trading partner, China. Externally generated growth is, however, a double-edged sword. The boom brought with it economic fragility and loss of international competitiveness. It made the economy vulnerable to commodity price slumps and adverse changes in FDI. The thesis constructs, tests and applies two economy-wide models for Mongolia: a comparative static CGE model, ORANIMON, and a dynamic CGE model, MONAGE. The models serve as laboratories for economic analysis in order to develop informed views on policy in Mongolia. The detailed nature of the models and the databases allow ORANIMON and MONAGE to capture salient features of the Mongolian economy. Short-, medium- and long-run simulations were undertaken for validating the modeling and evaluating the impact of the mining boom. Simulation results show that there were significant structural changes in the Mongolian economy over the period studied, 2005 to 2012. The shifts in foreign demand for Mongolian mineral export commodities contributed most of the economic growth. Maintaining flexible currency and wage adjustment, cultivating productivity through micro-economic reform and improving institutional quality are crucial for Mongolia to overcome the difficulties associated with the structural change. Areas for future research within an economic modelling framework emerge: an analysis of the impact of resources boom on poverty and inequality; a policy-relevant research related to the livestock sector; a long-term baseline for the Mongolian economy and an empirical assessment for examining the dynamic responses of macroeconomic policies to large capital outflows.

Search Google Scholar

Repository staff login