As my flight began descent to Ulaanbaatar, a fellow passenger remarked about the irony of landing at the Chinggis Khaan airport. Named after the historical figure who not only united Mongolia but created an empire beyond Asia, the airport now welcomes plane-loads of foreign investors.
Some investors are the marauding kind, keen to exploit the country’s natural resources. While Mongolians are warm, welcoming people, global powers are keen to control their country.
Mongolia is landlocked between China and Russia and has made a dramatic transition from being a Communist country to becoming a stable democracy and open society.
Unlike China, it does not impose any restrictions on global social media like Twitter and Facebook. China blocks it, Mongolia embraces it.
While there are few Indians here, Mongolia looks up to India for being a democratic market economy. It is also now welcoming global investors who can help the country reduce its crippling economic dependence on China. While the country has closer cultural ties to Russia, its mineral exports go mainly to China.
Mongolia has a population of 3 million, a GDP of US$10 billion but
a staggering natural wealth valued at over US$3 trillion.
I participated in the World Economic Forums’s strategic dialogue in Ulaanbaatar where global business and civil society leaders did some crystal ball gazing on its future.
WEF has developed three potential scenarios for Mongolia in 2040. First, where it is able to sell its mineral wealth across the world and also diversify into other products and services. This is the ideal scenario. The second is where it finds it tough to sell its minerals but is able to expand into other products and services.
This is not ideal, since it’s growth in this scenario would be moderate.
The third scenario is the nightmare option where it is unable to sell minerals and also can’t diversify. Industry experts and academics feel that all these are possible but Mongolia will have to think hard about its policies.
While minerals are its strength, China is the biggest buyer for Mongolia. Also, competition from other countries and volatile commodity prices mean that Mongolia may not get adequate returns on investment.
India has to play a critical role by supporting its institutional framework especially in trade and education. Indian investment in social infrastructure like health and skill development can help our friend in North East Asia diversify its market and reduce its dependence on China. Indeed, Mongolia must focus on other developing markets to ensure that a few global powers don’t control it’s destiny. Countries like Japan, India and South Korea can be the gateway to growth for Mongolia.
The author tracks India’s political economy and its engagement with the world.