With bountiful natural resource and an extremely small population to support, Mongolia is becoming an independently powerful economic powerhouse. With $5 billion pumped into the economy in 2011 fueling a stunning 17% increase in the country’s GDP, Mongolia has become the world’s fastest growing economy.
Landlocked between Russia and China can be both a blessing and a curse in international trade. The former has supplied all of Mongolia’s oil needs and the latter receives 90% of Mongolia’s exports. Both are wooing the country so they may become the dominant force in developing the country’s natural resource. However, with other nations pouring in, they might not be as successful in having too much leverage.
Mongolian cities, developing due to both population concentration and increasing global investors, are cropping up on maps at a rapid pace. They have the potential to become the new Dubai, a “smart city” with strong international influence. Using the Middle East’s model of investing profits into sustainable industries as a fall back, the Mongolia is making sure it does not fall for the natural resource curse like many African nations have done in the past. Depending solely on the mineral economy of coal, copper, gold, uranium, and rare earths can be dangerous when the good finally depletes or demand suddenly decreases.
But moving at such breakneck speed from old Iron Curtain ways towards democracy and free markets contains risks. While the once Soviet nation has managed to retain its individualistic nomadic culture, it may not be resilient to the homogenizing effect of globalization. Furthermore, the country should be wary of political favoritism. With the previous president facing charges corruption, investors are circumspect about a acquiring assets in a potentially controlled economy.
All these points aside, as the global economy recovers, the future looks bright for this Asian country both socially and economically.