Mongolia

A TOTAL OF 2,791,272 people lived in Mongolia in 2005. The condition of poverty in Mongolia is not understandable without some information about Mongolia's history and geography. One has to distinguish between the so-called Inner and Outer Mongolias, the first one an autonomous region of the People's Republic of China, the second one now called the Mongolian Republic, an independent state (that is, from China) [Page 727]since 1911, which was under strong Soviet influence till the collapse of the Soviet Union starting in 1989. The country is situated in central Asia between Russia and China; most parts of it are mountainous and covered with steppe. That is why livestock herding is still carried on today by nomadic or seminomadic cattle-breeders, which is very important for the Mongolian economy.

During socialist rule under Soviet influence, Mongolia rapidly industrialized. This caused enormous social change; greater parts of the population began to live in settlements, and towns were rapidly founded in the steppe. At first industrialization seemed to be very successful; in 1975 industrial production was higher than that in traditional agriculture, but this development did not grow on firm ground.

In the early 1980s, the economy of the socialist countries went into a severe crisis—a result of the system's failures. Against this background, the Mongolian government of 1989, after the collapse of the Soviet Union, decided to follow ultraliberal Western ideas of economic development. This extremely rapid transition from a centrally planned economic system to a marketoriented liberalized one meant that government activities were very much reduced, and several kinds of restrictions (such as on international trade) were lifted.

State-owned enterprises were privatized, in the beginning by giving vouchers to the Mongolian people, and later on by selling them to domestic and foreign persons/enterprises. This extreme change led to an economic decline and during the first years (1989–93), economic growth fell below that of the socialist era. The consequence was that poverty increased—in nearly all aspects.

The per capita income collapsed in real terms (from $1,643 in 1989 to $374 in 1999), and many people lost their employment. This economic collapse led to consequences in different areas of life: the birthrate quickly declined (in 1989 the population growth rate was 2.9 percent per annum, in 2000 1.4 percent per annum). This can be regarded as a kind of survival strategy. Part of such survival strategies is the migration from urban centers to rural areas in order to make a basic living as herders. Others tried to earn their livelihood in alternative sectors in the towns (such as small shopkeepers and informal currency dealers).

Another indicator of increasing poverty in Mongolia is deterioration in human capital, such as education and healthcare. The quality of education in general has decreased. Though primary education principally remains universal, fewer children attend school regularly, especially nomadic children who often help with herding, which also has to be regarded as part of a survival strategy. The rural population has no adequate medical care. Poverty reduction in the Mongolian Republic will be possible in the future if government intervention is strengthened. Good governance, in the case of Mongolia, means to become less dependent on foreign aid, and to adapt education and healthcare to Mongolian tradition, culture, and lifestyle while still modernizing. The informal employment sector in towns must be examined if some parts are to be future-compliant; as for livestock herding, a balance must be found between providing the livelihood of many families and avoiding environmental damage.

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