Mongolia's landlocked economy has long faced structural vulnerabilities due to its high concentration of mineral exports, particularly copper and coal. Following recent trade facilitation efforts and mineral sector expansions, the Mongolian economy experienced a GDP growth rate of 5.5%, largely driven by the massive Oyu Tolgoi copper-gold mine. However, the Asian Development Bank (ADB) has pointed out that this growth remains heavily concentrated in capital-intensive extractive industries, while non-mineral sectors like cashmere processing and agriculture have stagnated.
Inflation is a persistent issue, averaging 12.5% over the past three years. The depreciation of the Mongolian Tugrik (MNT) by more than 85% against the US Dollar has substantially inflated the costs of imported heavy mining equipment and essential consumer goods.
Urban migration is accelerating, with nearly half of Mongolia's 3.4 million population now residing in the capital, Ulaanbaatar. The youth unemployment rate (ages 15–24) stands at approximately 21.4%. The mining sector, despite dominating the nation’s export profile, directly employs less than 4% of the labor force, leaving many reliant on informal services or vulnerable nomadic herding.
While trade agreements have lowered barriers with regional partners, domestic manufacturing struggles to survive international competition. According to recent estimates, nearly 27.8% of the population lives below the national poverty line, and high reliance on food imports leaves households highly vulnerable to price spikes.
Evaluate the advantages of international trade to a resource-dependent emerging economy, such as Mongolia, if it were to pursue complete trade liberalisation.
