The resource curse in Mongolia: mineral wealth, institutional quality, and economic performance

Abstract

Mongolia is endowed with abundant natural resources from which it has generated a high level of economic growth over the past decade. Nevertheless, the country has already experienced some symptoms of the natural resource curse. This thesis argues that the quality of a country’s governance and institutions plays a crucial role in the management of resources, and therefore, it examines the political-economic environment of Mongolia’s resource sector. This study examines Mongolia’s performance on three steps of the natural resource management value chain: sector organization and the process of contract awards, the collection of taxes and royalties, and revenue distribution and public investment management. Furthermore, this thesis demonstrates that, while many resource-rich, developing countries experience civil war and conflict due to mismanagement of resources, Mongolia is not currently on this path. It concludes, however, that if the country does not effectively manage its resource sector, Mongolia’s young democracy may deteriorate.