The basis of the Mongolian economy has historically been considered agriculture and livestock. The lands of this state, located in the southeastern part of Asia, are rich in vast deposits of natural resources. The Mongols mine copper, coal, molybdenum, tungsten, tin and gold. The mining industry in Mongolia has a significant state-economic sector, but the extraction of raw materials is not the only industry in which the country's population is involved.
History of economics
The history of the industry of Mongolia dates back to 1924 - the year of the proclamation of the Mongolian People's Republic. Until this period, there was no industry, no such thing as a working class. All that the population was involved in was the processing of livestock products, including leather, sheepskin, felt skating, blacksmithing and carpentry. Such types of production had artisanal features and were aimed at serving the on-farm needs of the local population. Manual production was represented by enterprises for the primary processing of wool and leather, carpentry, metalwork, blacksmithing and other workshops.
The only industry in Mongolia at that time was coal mines in the Nalaiha tract. In some regions of the country, foreigners illegally engaged in the extraction of gold and precious metals.
In the first half of the last century, the Asian state was completely dependent on the import of manufactured goods from abroad. That is why one of the primary tasks of the government of the republic was the creation of its own industrial enterprises. Two problems stood in the way of the young and economically immature state: lack of qualified personnel and material means. Help in resolving these issues was provided by the Soviet Union.
Period of industrial development
At the first stages, the formation of the light and food industries of Mongolia began. The young republic of that time laid the foundation for the modern energy block of the economy. As far back as the 1920s, the widespread construction of processing plants began. In 1933, a brick, sawmill and mechanical plant began operating in Ulan Bator, and the first power station was opened.
Briefly about the industry of Mongolia is difficult to tell. The progressive development of the light and food sectors of the economy needed a fuel and energy industry that could meet production growth rates. The coal industry of Mongolia made a certain leap in development. Most of the coal mines in Nalaihe were expanded and mechanized, and in the area of Undar Khan, Yugozyr, Sayn-Shande, the development of new deposits began. Mongolia’s coal industry was more likely to meet domestic demand for solid fuels. In particular, local coal was used at a single power plant in Ulan Bator in 1939 and small power plants.
In the same period, another specialization of the Mongolian industry arose - metalworking enterprises, including an iron foundry. One by one, printing and paper mills, enterprises specializing in the manufacture of building materials, gold processing, etc. were erected.
Mongolia today
After the collapse of the USSR, aid from the Soviet republics, which amounted to almost a third of external GDP, ceased to flow, which led to a protracted recession in the Mongolian economy. Industries needed fundamental economic reforms.
The government of the country has taken a new course in the development of the country, aimed at building a market economy. During the reforms, a number of radical decisions were made in most areas of the national economy. The state has ceased to control the pricing process. Through liberalization of domestic and foreign economic activity, attempts were made to rebuild the banking system and the energy sector, programs for land privatization and the implementation of measures to attract foreign investment were developed and implemented. Mongolia to participate in international tenders.
However, the reform process was suspended as a result of resistance to the communist movement and political instability, which arose due to the frequent change of government.
The peak in the economic crisis came in 1996 after a series of natural disasters and falling world prices for copper and cashmere. But despite this, the very next year 1997 was recognized as the year of the country's economic growth. In the same year, Mongolia became a full member of the WTO. And although Russia's decision to ban the export of oil and oil products in 1999 had the most adverse effect on the state of the economy of Mongolia, the country continued to move forward with confident steps.
Since 1999, the WTO has decided to provide this young and promising state with annual financial assistance from partner countries: China, Russia, South Korea, and Japan. Although the economic indicators and the degree of industrial development in Mongolia can hardly be called advanced, many experts consider the economy of this country to be the most progressive in the whole world. In their opinion, the state has huge potential, given the reserves of mineral raw materials, the development of which is still at the initial stage.
The basis of industry: natural and human resources
Despite the many deposits of valuable mineral raw materials, their development is not carried out in full due to numerous restrictions. In Mongolia, brown coal is mined at four deposits, and in the southern part of the country, in the region of the Taban-Tolgoi mountain range, coal deposits have been discovered. According to preliminary data, geological reserves amount to billions of tons. Active development of small tungsten subsoil and areas rich in fluorspar is underway. The discovery of copper-molybdenum ores on Mount Erdenetiyn-ovoo served as the basis for the creation of a mining and processing plant, around which the industrial town of Erdenet is located.
The oil industry of Mongolia has been actively developing since the middle of the last century. One of the main enterprises in this industry is the oil refinery in Sain Shanda, a city located near the border with China.
Massive phosphorite deposits were discovered near Lake Khubsugul. However, today the development of the field was suspended, not even allowing it to develop fully due to environmental hazards. It is known about the accumulation of zeolites in the bowels of the earth - Mongolia carried out searches for this material together with the USSR. However, today the extraction of these aluminosilicate group minerals used in agriculture for biostimulation processes and adsorption is practically not carried out due to lack of funding.
The development of any Mongolian industry depends on the labor force. The population as of 2018 is 3.119 million people, of which about a third are citizens of working age. Part of the population (about 40%) is employed in agriculture, and in the industry of Mongolia - about 20%. The rest of the population works in the service sector, is engaged in private entrepreneurship and housekeeping. The unemployment rate is at 9%.
Food production
Briefly about the industry of Mongolia, which meets the needs of the population for food, we can say this: this sector of the economy accounts for about 40% of all production. The industry is actively developing the production of dairy and meat products. Numerous creameries and separator centers have been built in small towns (aimaks). It is worth noting that just a few decades ago, Mongolia could not count on the production of marketable butter. Today, it is one of the major export positions.
The main ingredient for the food industry in Mongolia is milk. In Ulan Bator there is a dairy plant that processes tens of tons of milk and cream per day. All production processes at this enterprise have long been automated and mechanized. The metropolitan dairy produces pasteurized dairy and sour-milk products, butter, cottage cheese, sweet glazed curds, ice cream. This enterprise is a leading food processing plant in Mongolia.
Not far from Ulan Bator there is a large meat processing plant equipped with modern technology, thanks to which the plant’s workshops demonstrate high production results. In the meat processing complex there are workshops for processing meat products, departments for the manufacture of semi-finished products, sausages, and canned goods. The majority of meat processing products are exported to other countries.
In addition to meat and dairy production, the food industry in Mongolia is represented by butter, confectionery, bakery, distillery, fish and other industries. A few years ago, a new direction of the food industry began to develop rapidly in the republic - flour milling. Today, the country provides the needs of its citizens for flour through the products of national producers. In addition to the mill in Ulan Bator, which produces more than 30 thousand tons of flour annually, there are a number of mechanized flour mills in aimags.
Industrial complex in Ulan Bator
Among the light industry factories in Mongolia, it is necessary first of all to note the industrial plant in the capital - this is one of the largest enterprises engaged in the processing of agricultural products. The industrial complex in Ulan Bator was built in 1934. Subsequently, this enterprise began to be called the forge of professional industrial personnel of the times of socialism. The industrial complex consists of a complex of plants and factories equipped with modern equipment. There are wool-washing, cloth, worsted, full-felt, shoe, saddlery and textile workshops. The Ulan-Bator industrial complex also includes in its structure shaver, chrome, sheepskin-fur coat, leather and other plants. The main products that the plant produces:
- various woolen fabrics;
- felt;
- drape;
- cloth;
- shoes for all seasons;
- felt boots;
- camel wool blankets;
- bags;
- outerwear.
Products of the plant are in demand not only within the country, they are exported to other countries. The industrial complex seeks to expand the production sphere. With the development of this holding, its individual workshops have long acquired the status of independent enterprises.
Progress in Heavy Industries
Over the past years, the country has seen positive dynamics in the development of energy, coal, oil, metal, mining, construction, woodworking and other manufacturing sectors. Average annual growth rates are higher than those in other former socialist republics. The growth rates of Mongolia's industry surprise many experts in the field of economics, since this country, not so long ago considered the most backward, is confidently approaching the level of advanced powers.
In order to develop the main sectors of the national economy, the Mongols strive to bring industrial production to a new level that corresponds to world average indicators. The government pays special attention to the creation and establishment of its own chemical-pharmaceutical, biological production, which plays a huge role in expanding the main sector of the economy - livestock and agriculture in Mongolia. In industry, as already noted, approximately 20% of the able-bodied population is involved, while almost 40% of able-bodied citizens are involved in cattle breeding, farming, and plant growing.
Industrialization of Mongolian cities and the development of coal industry
Briefly about the specializations and industries of Mongolia, which form the basis of the fuel and energy block of the country's economy, we can say that they are fundamental in the development of the national economy. The coal industry of the republic occupies a major place in this segment. Today, Mongolia is mining brown and coal at 13 large deposits. The most popular products for export are coking and high-grade coal, which is mined in the Nalaikhinsky district near Ulan Bator.
The coal basin of certain regions of Mongolia, in particular in the aimakhs of Uverkhangay and Sukhbaatar, the existing mines fully satisfy the need for solid fuel not only of their settlements, but also of some neighboring ones. Not so long ago, new coal mines were commissioned and old enterprises equipped with new equipment. This step naturally led to an increase in average annual production by more than 10-15%.
Along with coal deposits, natural reserves of ores, asbestos, limestone and other valuable raw materials are often discovered during field development. One of the rapidly developing industrial centers today is considered Darkhan-Uul. Here, within the Sharyn-Golsky coal basin, an industrial and energy complex is being built, which will provide coal for all spheres of the national economy and the needs of the population. That is why the city of Darkhan-Uul is called the “flower of friendship” by the Mongols. The countries of the former USSR (Russia, Kazakhstan), China, Japan, and Canada provide significant assistance to the republic in the construction of this complex. The main objects of the complex should be several large coal-mining enterprises, a railway transport hub, a high-voltage power line and an elevator. Today, the process of the emergence of another economic and cultural center of Mongolia is taking place here.
Oil production, electricity production
As the fuel base and industrial sectors as a whole grow, the production of electric energy has to be taken to a new level. A few decades ago, they did not even hear about electricity in remote regions. Today, the need for electrification is explained not only by the household needs of the population, but primarily by the need for mechanization and automation of production in the country and an increase in the finished product indicators. In aimak centers operate local electrical substations.
Unlike other industrial sectors, oil refining is a relatively young specialization in the industry of Mongolia. The industry is still in its infancy, but at the same time, the country produces half of the gasoline for its needs, and imports the rest.
The only major oil refining center is located in East Gobi. Not so long ago a young city appeared here - Dzunbayan, which also houses infrastructure and cultural facilities. The East Gobi meets almost half of Mongolia's fuel requirements.
In connection with the expansion of the manufacturing and manufacturing industries, the indicators of electric energy costs increase every year in Mongolia, which encourages the government to consider the construction of new thermal power plants.
Extraction of mineral ores and metals
The mining industry provides Mongolia:
- gold
- manganese;
- tungsten;
- magnetic iron ore;
- lead ores;
- rock crystal;
- turquoise and other non-ferrous, precious metals;
- with salt.
Mining and processing enterprises are being built near large deposits. Mongolia exports tungsten, fluorspar and certain types of non-ferrous metals to other countries. Ferrous metallurgy in Mongolia is represented by a mechanical processing plant with an iron foundry in Ulan Bator. For domestic and export sales, agricultural equipment, hand tools, and small equipment are produced here.
Marble, limestone, asbestos, gypsum, and mineral paints are mined in the republic. Extraction of raw materials of this type allows you to develop the industrial industry of building materials. , -. , , , . , , -. . .
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The Ministry of Agriculture and Light Industry of Mongolia is doing everything in order to support the agricultural sector of the economy and create the most favorable conditions for its development. Agriculture throughout the history of the existence of this state was the basis of its economy. In the transition to a market model, the importance of the agricultural sector has not decreased. Almost half of Mongolia’s labor reserve is involved in it, although even 50-60 years ago this figure reached 80%. Agriculture provides more than 40% of total GDP. Mongols are the third largest livestock per capita in the world, behind Australia and New Zealand.
Almost until the middle of the last century, while industry was undergoing the process of formation and transformation into an independent sphere, agrarian farming remained the only production sector. Even in those days, finished products were exported, which made it possible to receive almost 60% of the national income. Over time, this share declined and today amounts to about 35-40%, with more than half of the export products being raw materials.
The most important economic indicators in this country depend on the level and pace of agricultural development. In particular, the cost of agricultural raw materials is the main part of the cost of producing goods in the light and food industries. The Ministry of Agriculture of Mongolia is constantly working on the creation of a new concept and methodologies that would make it possible to minimize costs and increase the productivity of finished products.
Livestock husbandry is the predominant type of economic activity that the Mongols engage in. According to some reports, there are 12 cattle per person. In some aimaks, livestock is a conventional monetary unit in transactions of a material nature. Unlike animal husbandry, agriculture in modern Mongolia plays a secondary role.
Completion
The development of industry led to the formation of the working class according to the model of the proletariat of the USSR. In the process of training specialized workers, the participation of the Soviet Union played an important role. Some of the Mongols gained experience and knowledge, working in their enterprises under the supervision of sent Soviet masters. They were trained in special circles, technical sections, and training plants. Others received education directly in the USSR. Thus, Mongolia is an example of a nationwide desire for the economic prosperity of its country by developing industry, streamlining production processes and saving resources.