Mongolia's economy at a difficult crossroads

Posted on : 2006-08-07 21:44 KST Modified on : 2019-10-19 20:29 KST
Citizens paying high price for market transition

Kwon Taesun, editorial writer for the Hankyoreh

Ulan Bator-After the collapse of the former Soviet Union, Mongolia was one of the nations which achieved economic transition relatively smoothly. It at one point suffered from negative growth, but has recovered, and is simultaneously accomplishing democracy. To celebrate the 800th anniversary of its nationhood, Mongolia has named this year the 'Return of Genghis Kahn,' in order to completely restore his honor and take note of his accomplishments.

However, residents of Ulan Bator did not look so happy when this reporter visited. Vandria (most Mongolians do not use surnames), 34, works at a company and also has a part-time job as an interpreter. He studied business administration in the United States after learning Korean at college in Mongolia, but his wages total about 100,000 won (approximately 105 USD) per month.

To add insult to injury, prices in Mongolia are unreasonably high compared to wages. Lunch costs between 2,000 and 3,000 won. A sweater to stave off the cold winter air runs as much as 60,000 to 100,000 won.

"I don't know how I am living under such circumstances. In the U.S., I could buy something [useful] with 20 bucks, but here, I can't. Nevertheless, the streets are full of cars. I can't understand," said Vandria.

Professor Batur of Mongolia National University noted, "Mongolia has paid a very expensive price for making the transition to a market economy in the past 16 years. Up to 36 percent of the population is living below the poverty line, and the gap between rich and poor has been widening due to corruption caused by the nation's transitioning process. In addition, 45 percent of its territory has fallen into the hands of multinational enterprises, since the government indiscriminately handed over mining rights to foreign companies. As a result, there have been serious natural disasters because of indiscreet development of the land. Due to a dry climate, the land has become barren. As a result, many nomads who lost their cattle took flight to urban areas in droves, but they cannot find jobs in the cities," added Prof. Batur.

Under such circumstances, experts estimate the population of Ulan Bator to be 1.2 million, while the official figure is about 0.9 million, which explains the high amount of unemployed milling about the city. The government says the unemployment rate was only 6.7 percent in 2003. However, no one actually believes that figure, according to Chulundorz, another citizen of Mongolia who talked to the Hankyoreh.

As a result, more than 100,000 young men and women went overseas searching for jobs, resulting in a serious brain drain, pointed out Prof. Batur.

Many people are doubtful about the government's efforts. An anti-corruption law took effect in July, but bureaucrats are endlessly embroiled in corruption scandals. As a consequence, the popularity of the ruling Mongolian People's Revolutionary Party (MPRP) fell to 26 percent this year, from 59.2 percent in 2000.

However, there are indications of economic recovery for this landlocked country, sandwiched between Russia and China. The inflation rate dropped to 11 percent in 2004, compared with its 325 percent figure in 1992. In 2002, the country's GDP recovered its 1989 level for the first time, and posted a 6.2 percent growth rate in 2005.

"Now Mongolia is standing at a critical crossroads," said Chulundorz. But a great deal of factors will determine whether or not Mongolia will again be a nation known the world over.

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