Month: August 2015

Mongolia’s Economy

THE ECONOMEAST 2013-2014

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Improved Version:

Mongolia is one of many developing countries with a narrowly structured economy. This means a handful of certain industries is the main pillar of national GDP. Nevertheless, compared to others, its growth rate is very impressive. Currently, the economy mainly relies on mining of coal, as 90% of Mongolia’s exports consist of such natural resources. The country’s most prominent trading partners are currently Russia and China. For now, the Mongolian government is trying to benefit even more from mining industry by improving the transportation infrastructure linked to it. Yet people are starting to speak out against the environmentally adverse effects that mining produces, and are contemplating whether such negative externalities are worth it. Therefore, what should the country do now to develop its economy further? An economic tactic called ‘diversification’, is part of the answer; diversification is the strategy of developing other sectors of the economy besides mining. This is done in the hopes that the economy will not be as volatile as it has been.

Mongolia group

During my stay in Mongolia in 2014, for two weeks, I had the privilege of visiting and interviewing  a number of different financial organisations, which all aim to foster economic development within the country. The local branch of European Bank for Reconstruction and Development, EBRD, was one of such organisations I visited.

The following institution helps other small industries gain access to capital to expand and become less dependent on the government. From this bank’s point of view, diversification is the correct strategy to follow. For instance, the EBRB recommends development of the tourism sector, believing that Mongolian culture has the potential to draw global interest of numerous tourists. After all, many tourists have enjoyed visiting the serene countryside landscapes of Mongolia. Moreover, EBRB strongly supports firms that are engaged in the manufacturing of natural materials, so that they are able to benefit more from the value gained through the productions

One major problem that such firms are facing though is inaccessibility to apt technology and skill in the workforce to achieve this personally.

Another concern is their unemployment rate. Providing jobs and opportunities will be extremely helpful to the growth of Mongolia’s economy, but education and training will be necessary for the potential of Mongolia’s human resources to be realised. This is where an organisation named UN Habitat enters the stage. Engaging with the local community, it provides the new life opportunities and jobs to those who need them. UN Habitat is tied to the Japanese government and is also a non- profit organisation. To contribute to the stabilisation of the economy and society, UN Habitat is supporting unemployed individuals in ‘ger’ districts; the slum areas on the outskirts of the cities.

At first, numerous citizens in the locality were skeptical about the activities of UN Habitat, but this doubt gradually vanished after they became associated with the UN institution. The people who supported their projects were given different occupations, such as construction workers and cashiers. UN Habitat also contributes to developing the next generation of workers by properly fertilising the future seeds for the growth of Mongolia through education. For those who cannot afford education, this organisation provides the opportunities to study at the schools at a reasonable price. Approximately, 600 kids are taking the advantage of this service, and 60 teachers are employed to teach them various subjects. Thanks to this organisation, the employment prospects for some in the future generation have been raised.

Yet there is one more obstacle that is blocking the possibility of a better future for Mongolian economy—the issue of human rights. The core of this problem can be traced back to the previous generations, which were controlled by the old totalitarian regime. As a result, there are many cases where governments’ abuse of power has infringed upon the human rights of its society. Thus, to restore its reputation and to obtain more faith in the economy from other countries, many organisations, such as UNDP (United Nation Development Programme), are trying to improve the human rights in Mongolia.

Unsightly deception in Economy

THE ECONOMEAST 2014-2015
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Improved Version in 2015:

In our modern society, the threat of scams is not treated with sufficient trepidation and vigilance. A scam usually occurs when one person or business deceives another party with a promise of goods, services or financial benefits, which do not actually exist. One of the well-known examples would be Bernard L. Madoff Investment Securities LLC, Bernard Madoff’s Wall Street firm, which was responsible for the largest ponzi scheme in history. In short, a ponzi scheme is a planned fraud that involves investment returns being paid by new capital and not by profits. By deceiving others and creating a web of investment funds, Bernard profited by approximately $65 billion over nearly two decades. His victims were not only celebrities and billionaires, but also humble investors, banks and even charities. When his scheme was uncovered in March, 2009 by police, Madoff was eventually sentenced to 150 years in prison. Countless individuals assume they are not so gullible that they would fall into frauds. Nevertheless, approximately 11.6 million people annually fall prey to just identity theft, which is a common type of scams. .

The negative effects of scams do not simply end with the direct casualties; the results also affect many third parties, along with the economy at both local and global level. After being exploited by fraudsters, victims would likely lose their sense of security, self-esteem and dignity. As a result, the individuals and firms may begin to exercise more caution, invest less and spend less on goods and services. This may lead to a significant reduction in the demand for goods and services in a particular country and could lead to countries experiencing slower economic growth. The value of GDP per capita would remain stagnant or even shrink; then, unemployment would rise, and people would spend even less money. In 2013, due to identity theft, approximately $24.7 billion was lost in US. This tremendous amount of cash could have contributed to an increase in economic growth.

Some individuals tend to think that strangers are inconsequential, to which is genuinely understandable. The harm these strangers undergo is none of others’ concern. People take the same approach, when looking at scam victims. Individuals already have enough on their plates with their personal predicaments; they cannot afford any time or energy to help others. Therefore, they avert their attention. Even if they do not look away, all they might offer are empty words of sympathy. Then, they would clandestinely feel glad that they were not the victims. However, in the reality, this issue actually involves all of us. Whenever there is a scam incident in a country, it is unwise to regard it as someone else’s business. People need to understand that scams affect the society as a whole. Knowing this, government needs to invest more time into developing foolproof policies that would discourage anyone from attempting to fraud others. Otherwise, numerous unfortunate people and firms will likely lose possible business opportunities.