Government and Economy

The 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 (see below).

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.

The Economy

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 economic growth.

Back to the Top 


The 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 fortress."

Back to the Top 


Administrative Structure
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 districts.

Back to the Top 


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 exports.

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 the remainder.

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.

Back to the Top 

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 the economy.

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.

Back to the Top 


  Information provided by the Ministry of Tourism. Government of Mongolia.


Home | Bhutan | Brunei | Cambodia | China-Yunnan | East Timor | Hong Kong | India | Indonesia | Japan | Kazakstan | Korea | Kyrgystan | Laos | Malaysia Maldives | Mongolia | Myanmar | Nepal | Pakistan | Philippines | Singapore | Sri Lanka | Tajikistan | Taiwan | Thailand | Tibet | Turkmenistan | Vietnam Uzbekistan


Website partner : and Hotels around Asia.
Version Francaise :

Copyright © 2002 Orasia co.,ltd. ( All rights reserved. Reproduction without permission prohibited.