Government and Economy
National Flag of Mongolia is red with a vertical blue stripe down the
middle. On the left hand red stripe of the flag is a yellow Soyombo
The colours are symbolic. Red is the colour of fire symbolizing
progress and prosperity while the blue represents the colour of the
sky, meaning peace and eternity.
Mongolia began its
transition from a centrally-planned to a market-oriented economy in
1990. The break up of the Soviet Union and of the socialist trading
system created difficulties for the Mongolian economy. Like other
transitional economies, Mongolia experienced a period of depression
and increased poverty in the first part of the 1990s. Between 1990 and
1992, GDP declined by 20%. According to the Living Standards
Measurement Survey (LSMS) of the World Bank in 1998, 35.6% of the
population lived below the weighted national average poverty line.
During the 1990s, Mongolia made considerable progress towards a
private, market-based economy. This included the introduction of price
and trade liberalisation, launching large-scale privatisation,
limiting budget transfers and lending to State enterprises and the
setting up of a commercial banking system. As a result of these
actions, inflation, which had averaged more than 50% during 1995-1996,
was cut to 20.5% in 1997 and 6% in 1998 Mongolian Statistical
Yearbook-1999, National Statistical Office, Ulaanbaatar 2000.
The Mongolian economy depends mainly on the performance of agriculture
and mining and their price fluctuation in international markets. In
1999, agriculture, the main livestock production was the source of
approximately 35% of GDP; commerce 29%; services, 18%; mining, 10%;
and industry, 7.5%. Mining generated more than 80% of the economy's
export earnings. The industrial field includes wool and cashmere
processing, leather goods production, food processing, and
construction. In 1999, 70% of GDP was generated by the private sector.
In 1990 the equivalent figure was 10%.
In 1999/2000 and 2000/2001 Mongolia suffered two harsh Winters, which
seriously affected farming production, causing a decrease in the GDP
growth rate to only 1% in the year 2000.
In August 2000, the new Government adopted its 2000-04 Action
Programme and a Poverty Reduction Strategy Paper (IPRSP) is under
preparation in collaboration with a series of international financial
institutions (IFIs). The aim of the IPRSP is the decrease of
unemployment and the increase of living standards of people through
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Soyombo is an old ideogram symbolising the Mongol's freedom and
independence. As long ago as the 17th Century, it was depicted on the
banners of warriors fighting against the Manchurian invaders and
later, on the battle standards of the guerillas of the 1921 People's
Revolution. Each element of the symbol has its own meaning. The three
tongued flame crowning the emblem symbolise the nation's past, present
and future prosperity: from time immemorial fire has meant the
continuation of the family and the clan. Depicted underneath the flame
are the sun and the crescent, both old Mongolian totems.
"We are the people whose father is the new moon and whose mother is
the golden sun", say the old legends. The flame together with the sun
and the crescent symbolise the prosperity and progress of the
Mongolian nation. The spear or arrow tip turned downwards is supposed
to signify victory over the enemy.
The two triangles in the upper and lower part of the ideogram tell
about the people's determination to uphold their freedom and
independence. The rectangle is the symbol of uprightness, honesty and
nobility and the two smaller rectangles symbolise honesty of
government and rulers.
In the centre of the Soyombo is the old symbol signifying the unity of
pairs of natural elements; fire and water, earth and sky and man and
woman. According to other interpretations, this also denotes two fish
swimming in concentric circles. The Mongolians see fish as a symbol of
vigilance since fish never close their eyes. Fish also symbolise
wisdom and reason. The two vertical lines at the sides of the emblem
mean friendship and staunchness. An old Mongolian saying goes, "Two
friends are stronger than stone walls." In the Soyombo, these two
lines are understood to be an appeal, "May the whole nation be bound
together by ties of friendship turning it into an indestructible stone
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Power is shared between the President, the Parliament (State Great
Khural), the Prime Minister's ten-member cabinet and the Supreme
Court. The President and Parliamentary Members are elected directly by
the people at two different elections. The Prime Minister is nominated
from the party with the largest number of seats in Parliament.
Only the Parliament has legislative power. It determines the basis of
domestic and foreign policy, approves and makes changes in laws,
determines and announces presidential and parliamentary elections,
elects members of the judiciary and the Supreme Court, appoints and
dismisses government members, defines the state financial credit,
monetary and tax policies and sets base guidelines for the
socioeconomic development of the country. The territories of Mongolia
are administratively divided into 21 regions - 18 Aimags and 3 cities.
Each Aimag is generally divided into Sums that are further divided
into smaller units called bags. The capital city has districts and sub
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In the late 1980s,
agriculture was a small but critical sector of the Mongolian economy.
In 1985 agriculture accounted for only 18.3 percent of national income
and 33.8 percent of the labor force. Nevertheless, agriculture
remained economically important because much of Mongolia's industry
processed agricultural products--foodstuffs, timber, and animal
products, such as skins and hides--for domestic consumption and for
export. In 1986 agriculture supplied nearly 60 percent of Mongolia's
Mongolian agriculture developed slowly. An abortive attempt to
collectivize all arads occurred in the early 1930s; efforts to
encourage voluntary cooperatives and arad producers' associations
followed. In the 1930s, the government also began developing state
farms, and by 1940 there were ten state farms and ninety-one
agricultural cooperatives. In 1937 the Soviet Union provided ten
hay-making machine stations to prepare fodder for livestock. In 1940
agriculture represented 61 percent of national income, and it employed
approximately 90 percent of the labor force.
In the 1950s, agriculture began to adopt its present structure and
modern techniques, based in part on material and technical assistance
from the Soviet Union and East European countries. In the 1950s, the
hay-making machine stations were reorganized as livestock machine
stations. In 1955 negdels replaced the arad producers' associations.
By 1959 the state had accomplished the collectivization of
agriculture. In ten years, agricultural cooperatives had more than
doubled, from 139 in 1950 to 354 by 1960. Ownership of livestock and
sown areas changed dramatically as a result of collectivization. In
1950, according to Mongolian government statistics, state farms and
other state organizations owned approximately 0.9 percent of livestock
and 37.8 percent of sown areas; negdels had about 0.5 percent of
livestock and no sown lands; and private owners some held 98.3 percent
of livestock and 62.2 percent of sown areas. In 1960 state farms and
other state organizations owned 2.7 percent of livestock; negdels,
73.8 percent; and individual negdel members, 23.5 percent. The state
sector owned 77.5 percent of sown lands, and the cooperative sector
By 1960 agriculture's share of national income had fallen to 22.9
percent, but agriculture still employed 60.8 percent of the work
force. After 1960 the number of state farms increased, state fodder
supply farms were established, the number of negdels decreased through
consolidation, and interagricultural cooperative associations were
organized to facilitate negdel specialization and cooperation.
Mongolia also began receiving large-scale agricultural assistance from
the Soviet Union and other East European countries after Mongolia's
1962 entry into Comecon. The Soviet Union, for example, assisted in
establishing and equipping several new state farms, and Hungary helped
with irrigation. In 1967 the Third Congress of Agricultural
Association Members founded the Union of Agricultural Associations to
supervise negdels and to represent their interests to the government
and to other cooperative and social organizations. The union elected a
central council, the chairman of which was, ex officio, the minister
of agriculture; it also adopted a Model Charter to govern members'
rights and obligations. In 1969 the state handed over the livestock
machine stations to the negdels.
Negdels, which concentrated on livestock production, were organized
into brigad (brigades) and then into suuri (bases), composed of
several households. Each suuri had its own equipment and production
tasks. Negdels adopted the Soviet system of herding, in which arad
households lived in permanent settlements rather than traveling with
their herds, as in the pastoral tradition. In 1985 the average negdel
had 61,500 head of livestock, 438,500 hectares of land--of which 1,200
hectares was plowable land, 43 tractors, 2 grain harvesters, and 18
motor vehicles; it harvested 500 tons of grain. Individual negdel
members were permitted to own livestock. In mountain steppe pasture
areas, ten head of livestock per person, up to fifty head per
household, were allowed. In desert regions, fifteen head per person,
up to seventy-five head per household, were permitted. Private plots
also were allowed for negdel farmers.
State farms, compared with negdels, had more capital invested, were
more highly mechanized, and generally were located in the most
productive regions, or close to major mining and industrial complexes.
State farms engaged primarily in crop production. In 1985 there were
52 state farms, 17 fodder supply farms, and 255 negdels. In 1985 the
average state farm employed 500 workers; owned 26,200 head of
livestock, 178,600 hectares of land-of which 15,400 hectares was
plowable land, 265 tractors, 36 grain harvesters, and 40 motor
vehicles; it harvested 12,100 tons of grain.
In the late 1980s, several changes in governmental organization
occurred to facilitate agricultural development. In October 1986, the
Ministry of Agriculture absorbed the Ministry of Water Economy, which
had controlled irrigation. In December 1987, the Ministry of
Agriculture, the Ministry of Forestry and Woodworking, and the
Ministry of Food and Light Industries were abolished and two new
ministries--the Ministry of Agriculture and Food Industry, and the
Ministry of Environmental Protection--were established. Among the
functions of the Ministry of Agriculture and Food Industry were the
further coordination of agriculture and of industrial food processing
to boost the food supply, and the development on state farms of
agro-industrial complexes, which had processing plants for foodstuffs.
The Sharin Gol state farm, for example, grew fruits and vegetables,
which then were processed in the state farm's factories to produce
dried fruit, fruit juices, fruit and vegetable preserves, and pickled
vegetables. The Ministry of Environmental Protection incorporated the
Forestry and Hunting Economy Section of the former Ministry of
Forestry and Woodworking and the State Land and Water Utilization and
Protection Service of the former Ministry of Agriculture.
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Government of Mongolia
Mongolia existed for
decades as a buffer state between the Soviet Union and China, but amid
the collapse of Communism and the Soviet Union's disintegration in
1991, Mongolia too underwent rapid change. In 1990, after
months of pro-democracy demonstrations, a new Communist party
constitution set the goal of building 'democratic humane socialism'
based on a multi-party democracy. Elections in July 1990
brought a coalition government, and the move towards privatisation of
In January 1992, a new constitution was adopted that renounced
socialism, changed the country's name to the State of Mongolia, and
made Mongolia a republic with parliamentary government and a directly
elected president. Mongolia has remained neutral in international
affairs. In 1996, the Democratic Union Coalition came to power.
The Government's Programme of Action was approved by the State Great
Khural in November 1996. The programme emphasised the need for
consolidation of democratic gains and rapid short and medium-term
economic measures to address economical revival.
The central government is headed by the President and supported by the
Prime Minister and 11 other ministries. The Head of State is the
President, who is elected for four years. President Natsagyn Bagabandi
was elected in 1997. The government is headed by the Prime
Minister who is appointed by the State Great Khural for four years.
Prime Minister Nambar Enkhbayar was appointed in July 2000.
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Information provided by
Ministry of Tourism. Government of Mongolia.