2.1 History
2.2 Politics and Administration
2.3 Economic Situation
Archaeological finds have established the Mongols as a distinct people as early as the second millennium B.C. The primitive communal system gave way to the formation of the Hun state towards the 3rd century B.C. Between the third and the ninth centuries A.D. sovereign states were formed by a class of feudal lords which had steadily been gaining importance. The Turkish Empire formed during this period disappeared with the death of its leader, Toniukuk, in 730 A.D.
Chinggis Khaan unified the Mongols into a feudal state in 1206, and the Mongolian territory subsequently expended to cover most of modern-day China and reached well into Central Europe. By the mid 1300s, however, the Mongol Empire had disintegrated, and a prolonged period of internecine strife followed. Under the Convention of Dolonnor of 1691, Mongolia became a province of China. The next two centuries were characterized by tribal dispersions, colonization by foreign powers, especially of the southern lands, and the consolidation of theocratic power in the northern territories.
The 1911 Chinese revolution allowed Mongolia to claim independence until 1915, when it was scaled back to autonomy under Chinese suzerainty, and in 1919 Mongolia was fully reincorporated into Chine. In march 1921, independence was reasserted, and a brief period of constitutional monarchy followed, ending after the ruler's death. In 1924, the People's Republic was founded. Over the next three years, politics shifted from right to left and civil unrest was prevalent. Over this period, too, Mongolia increasingly aligned itself politically, economically and militarily with the former USSR.
The transformation of Mongolia in the last seven decades from a feudal agrarian society to a relatively modern and structurally diverse state was accomplished under a socialist regime and a system of centrally directed allocation of physical and financial resources. Under the Constitution of 1960, supreme political power rested in the hands of the People's Great Khural (upper house), comprised of elected representatives. Executive power was placed in the hands of a Presidium and Council of Ministers, whose election by the Great Khural was assured by the Central Committee of the MPRP, the sole political party. The Parliament, elected by universal suffrage at the national level, consisted of two chambers - the People's Great Khural (upper house) and the State Baga Khural (lower house).
Political reforms, following widespread dissatisfaction with the single-party system, resulted in April 1990 in various amendments to the 1960 Constitution allowing, among other measures, legal formation of political parties. In August 1990 the country held its first parliamentary elections, in which opposition parties gained 40% of the seats in the Baga khural.
The Great Khural was empowered to adopt or amend the Constitution; elect the country's President; and appoint the vice President, Prime Minister and Chief Justice of the Supreme Court on the President's recommendation.
A new Constitution passed by the Baga Khural in May 1991 was adopted by the Great Khural in January 1992. The new Constitution, which took effect on 12 February, changed the name of the country from the People's Republic of Mongolia to Mongolia. It also embraced democracy and a market economy.
The new Constitution makes Mongolia a democratic parliamentary state with independent legislative, executive and judicial branches, and quarantines its citizens freedom of speech, religious tolerance and other basic human rights. Citizens have been given the right to own property (including land) and to engage in business activities of their choice.
Mongolia is divided into 21 administrative units (aimags). Aimags are divided into sums (districts). Sums are comprised of bags. The latter are the lowest rural administrative unit. There are total of 324 sums and 1,600 bags in the country.
The change from central planning to a market has over the past five years resulted in a strong contraction of the Mongolian economy. Between 1989 and 1993, GDP in 1986 prices declined 22.3. The only major sectors which escaped the overall downward trend were agriculture, where production remained stable, and the 'other services', which include catering and tourism-related activities, which grew by 18%.
Unemployment, virtually unknown before 1990, increased rapidly, with close to 72,000 persons being registered as unemployed at the beginning of 1994. Estimates however indicate that actual unemployment may be 200,000 out of a working force of approximately one million. In 1994 there were clear signs of an economic recovery. According to IMF estimates, GDP is likely to grow 2.5%. Inflation seems to be under control now, the monthly increase in the consumer price index having slowed down to 3.8% in September 1994. The average for 1993 was 9.1%. Building activity, though only a fraction of its 1988 peak, is increasing for the first time in six years.
Exports still exceeded imports during the first months of the year, but over the whole year exports are expected to equal imports. Unemployment is still increasing, but the increase was down to 5% during the first nine months of the year compared to 13% in 1993. The industrial sector accounted for 32% of gross domestic product in 1993, making in the largest single contributor to the national economy. It was followed by agriculture and 'other services ' each 23%, and trade with 19%. As indicated above the 'other services' sector has grown rapidly in recent years. Its share in GDP has increased by 10% points since 1989.
The state budget condition remains weak. Total expenditure was projected at US$0.23 billion while the total revenue was projected at US$0.20 billion in 1994. The government has introduced a number of new taxes and customs duties, e.g. duties on imported products such as petrol and private cars to increase its income.
Before the year 1990 Mongolia's currency was not convertible. There were different rates for commercial and non-commercial transactions. Its value was artificially high at both rates. In 1990 the government, after deciding that the Tugrik (T) should eventually become convertible, begged it to the US dollar at a rate of T 5.63/1 US$. Since then it has been devalued several times. The exchange rate was adjusted from T 40/1 US$ to T 150/1 US$ early in 1993, and a unified exchange rate was established. In early 1994 the rate was T 410/1 US$. After that the foreign exchange rate has more stable.
Macroeconomics policy in 1994 was directed at a legal basis for market economy relations, the implementation of an integrated package of fiscal and monetary policies, adjustments in key tariffs and prices and checking economic decline.
As a result of this policy a number of positive developments were achieved in the national economy. Substantial progress was made toward macroeconomics stabilization and a basis was laid for the implementation of the key tasks of the Government's Program of Action. The main economic indicators are given in Table 1
Table 1 - Main economic indicators
|
|
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
|
GDP growth rate* |
4.2 |
-2.5 |
-9.2 |
-9.5 |
-3.0 |
2.1 |
|
Of which |
|
|
|
|
|
|
|
-industry |
11.4 |
-0.3 |
-13.1 |
-11.5 |
-10.6 |
2.7 |
|
-agriculture |
13.8 |
-2.0 |
-5.1 |
-4.0 |
-7.1 |
7.1 |
|
inflation (CPI) |
- |
- |
54.4** |
321.0 |
183.0 |
66.3 |
|
Registered unemployment (thous) |
- |
- |
55.4 |
54.0 |
71.9 |
74.9 |
|
Imports (US$mln) |
963.0 |
924.0 |
360.9 |
418.0 |
379.0 |
362.7 |
|
Exports (US$mln) |
721.5 |
660.7 |
348.0 |
388.4 |
382.6 |
360.5 |
|
Foreign credits, aid |
- |
- |
63.4 |
182.5 |
187.1 |
111.4 |
*In constant 1986 prices
** Prices increase after the exchange rate reform on 16 Jan, 1991
For the first time since 1989 there was an increase in Mongolian GDP. In 1994 GDP grew in real terms by 2.1%, including 2.7% growth in industry, 7.1% in agriculture, 3.7% in capital construction and 2.5% in the service sector. For the first time in recent years industrial production increased, and there was substantial improvement in agriculture. These contributed to the achievement of positive overall economic growth. Consumer price inflation in 1994 was 66.3%, which is one fifth of the 1992 rate and 36.5% of the 1993 level. The average monthly inflation rate in 1994 was 4.3%. That is three times down against the 1992 level.
