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Prevent the Resource Curse in Mongolia

Rentsenbazar Gonchigtseren  
【摘要】:As we knows that there is more bad practice than good, such as diamonds have not made Angola rich. Oil has not delivered prosperity to Venezuela. Rich reserves of Colton, Gold and Copper have fed war in the Democratic Republic of Congo. Our closer home in Russia, a few oligarchs have gained immense wealth, while70percent of Russians earn less than380$per month. And so, the world is filled with rich lands-that have poor people. In nations like Congo, Surname or Sierra Leone, which are dependent on the mining industry, per capita income declined by almost11percent in the1990s while globally per capita income rose by17percent during the same period and indeed, countries with large primary exports sectors (oil, rubber, diamonds, minerals) often, though not always, grow more slowly than their peers. This phenomenon recognized in mainstream economics as the "Resource Curse". Mongolian economy has been experiencing unprecedented economic growth rate for the last five years mostly because of significant amount of foreign direct investments directed toward its booming mineral resource exploration sector and the current high commodity prices. In result,6huge world class mineral reserves are explored. Many international non-government organizations, scholars and Mongolian government are urging the project to start its operation. Because they predict that Mongolian economy will take off, experiencing30%GDP growth rate and creation of significant of amount of job for the next two decades once the reserves undertakes extractions. Therefore, any delay would imply huge economic losses. On the other hand, there have been many studies have shown that most countries that have abundant natural resources have done less well than those who don't have possess such resources. However, this paper reveals that it depends on how well the Mongolian government manages (1) its macro economy and fiscal and monetary policy situation,(2) its'tax and administration systems to manage the revenues and rents and diversify it economy,(3) to obtain the political will to prevent corruption and wasteful spending, and (4) to develop its human and social capital. Finally, I believe that Mongolian government will have to build even better-rules, administration, justice and most importantly, their education and scientific base. In the short invest in people. For a new tomorrow is filled with hope and promise and fraught with dangers as well. I leave you to decide with this paper, whether the natural resources of this country will be a blessing or curse. I hope personally though, that they will be a blessing.

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