Mongolia - Economic sectors

In 1999, Mongolia derived its GDP from 3 principal sectors: agriculture, fishing, and hunting (33 percent), industry (24 percent), and services (43 percent). Historically,

livestock breeding and agriculture have been the cornerstones of the national economy. With Soviet assistance, Mongolia established an industrial sector based mainly on mining and the processing of agricultural products. Mongolian economic development is limited by its landlocked isolation, harsh continental climate, and small population. Significant economic potential lies in its unexploited natural resources including copper, molybdenum, tin, tungsten, and gold. Domestic reserves of coal can satisfy growing energy consumption, and the discovery of oil reserves in 1994 raises the possibility that Mongolia might eventually become a petroleum-exporting country.

During the 1990s, Mongolia experienced a deep recession with the disappearance of Soviet economic assistance and the disintegration of the Soviet-backed Council for Mutual Economic Assistance (CMEA), which had been a major market for Mongolian exports. The country increasingly relies on the export of raw materials to the international market, and it is extremely vulnerable to fluctuations in world prices for its major export products, copper and cashmere. Mongolia needs large foreign direct investments and international assistance to modernize existing technologies and to begin major economic changes. In the 1990s, the Mongolian government undertook a series of free-market oriented economic reforms focusing on privatization, internal and external trade liberalization, and promotion of private entrepreneurs. In 1997, because of its rapid and extended economic liberalization, Mongolia became one of the first of the former socialist countries to be accepted into the World Trade Organization (WTO), opening up Western markets for Mongolian goods.

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