Industry

Mongolia depended almost exclusively on livestock herding until the 1960s. From 1960 to 1980, Council for Mutual Economic Assistance (Comecon) aid to Mongolia focused on the Industrial sector. This had some success, and industrial production caught up with and then overtook agricultural output in the 1970s. By 1990, industry (excluding construction) accounted for 35.6% of GDP compared to 28.9% in 1980. The industrial sector employed 62.5 thousand people and produced MNT440.5 billion worth of products in 1998. The value of this sector is 24.1% of total GDP. Industrial Output increased by 3.3% in 1998 at current prices from the previous year. The largest sectors include; mining of metal ores (37.9%), electricity & energy generation (19.4%), manufacture of food products (14.2%) and manufacture of textiles (8%).

Agriculture

Agriculture forms 32.5% of the GDP in Mongolia and the output of livestock production represents 87.6% of total agricultural output. The total numbers of livestock (sheep, goats, camels, horses and cattle) reached 32.9 million in 1998. 129 million hectares of land is designated as agricultural land of which 326.6 thousand hectares is cropped. 194.9 thousand tons of wheat, 65.2 thousands tons of potato and 45.7 thousand tons of vegetables were harvested in 1998. Gross agricultural output in 1998 at current prices amounted to MNT425 billion (livestock MNT372 billion and crops MNT53 billion). Mongolia has five main types of livestock and in 1998 estimated the following livestock populations - Camels 356,500, Horses 3,059,100, Cattle 3,725,800, Sheep 14,694,200, Goats 11,061,900. An estimated 187,147 households are herders, an increase of 250% from 1990 and an increase of 1.9% on 1997. Over 55% of herders are between 16 and 35 years of age. Over 60% of herders had less than 100 livestock, a reduction of 8% since 1995. As well as the five main livestock, others are also bred. In 2004, the following estimates were made on other livestock: Pigs 25,900, Poultry 76,600, Reindeer 643, Donkeys 1510, Bees 1057, Rabbits 193 and Foxes 28.

Foreign investment

According to the Foreign Investment Agency of Mongolia, priority sectors for foreign direct investment (FDI) have been mining, agro-industry, tourism and infrustructure. In 2004, FDI in Mongolia was only 3.5 percent of GDP.
Current incentives for foreign investors include following:
1. Depending upon the particular sector in which the investment is being made, investors enjoy tax exempt for the first 3-10 years and 5 year extension with 50% tax deduction thereafter.
2. Technological equipment and machinery brought into the country as part of the share capital are exempted from value-added and customs tax.
And new foreign investment law highlights following: simple registration proce-dure (One-Stop Service), stability agreement for long-term investment, contractual joint-venture agreement, minimum investment level (US$50,000), investment promotion institution framework.

Government role in economy

Since the beginning of reform in 1990, the role of the government in the economy has been strong. Adjustments in purchase prices for grain and other commodities, wage increases for state workers, difficulty in collecting national taxes, and the decline of world market prices for Mongolia's principal exports (gold, copper, cashmere) have contributed to a decline in official government revenues.
Mongolia's long-term growth depends principally on mineral and petroleum extraction, and value-added processing of livestock products (particularly cashmere and meat). While tourism offers some potential, it is limited by the short summer, the cost of travel to Mongolia, and lack of infrastructure (roads, hotels, etc. The largest state-owned enterprises (such as Erdenet copper concern) have yet to be privatized. However, the private sector now makes up over 70% of GDP and privatizations continue through sealed bid auctions. According to the US Dept. of Commerce's guide, the poli-tical problems most affecting business development in Mongolia are: 1) the need to strengthen the rule of law; 2) corruption in the bureaucracy; and 3) relations with Russia and China. Reform within the legal and judicial sectors that is sorely needed as a foundation for business has been delayed and deferred. While corruption has not reached levels one might find in many other parts of the world, it is increasingly an obstacle to honest business and efficiency.

Exports and Imports

Exports: Cashmere, wool, skins, copper, molybdenum concentrates and fluor spar Imports: Petroleum products, consumer goods and industrial equipments

Population

The population is 2.475.400 million by January 2003 and 51% live in urban areas. The total number of ethnic Mongols is approx. 7.9 million. Over 4.5 million Mongols live in 2 autonomous regions, 6 provinces and 10 counties of China while 340,000 live in 4 autonomous republics and 2 regions of Russia.
Most Mongols in China are Inner Mongolians. Republic of Buryatia and Republic of Kalmyk of Russia are two major areas where many ethnik Mongols live. According to researchers and scholars, some 20,000 ethnic Mongols live in France. Those are mainly Kalmyks from the Lower Volga who fled from the Soviet regime during the World War two.
And another 2000 kalmyks live in the USA. They are concentrated in Philadelphia and New Jersey.