Post on 03-Jun-2018
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FOREWORD
What will Mongolia look like in 10 years? If a single person were to consider
this question alone, they would come up with only one version of the future.
But if ten or even a hundred people were to reect on this question, they would
no doubt develop a much more interesting and diverse product. Scenarios can
be developed under the consideration of different national and international
aspects.
The World Economic Forum organized a Country Strategy Dialogue on the
Future of Mongolia on September 15-16, 2013. The goal of this event was to
develop scenarios for Mongolia. These scenarios focus on Mongolias role in the
North-East Asian context and from a global point of view. The results will be
presented at the annual World Economic Forum in Davos 2014.
Prior to the World Economic Forums initiative, in 2012 experts from Heminge & Condell held rounds of
discussions in Ulaanbaatar with representatives from government; business and society on what Mongolias
future could look like. As a result of these discussions and separate contributions from Mongolias various
stakeholders, four different scenarios emerged on What would Mongolia look like in 2025.
It was thought that the future of Mongolia will substantially depend on the foresight of Mongolian leaders
and their ability to anticipate and manage the future. Furthermore, as Mongolia is a mining-dependent nation
at present, the demand for Mongolias mineral products on the world market will also have a considerable
impact on our future. Hence, the four different scenarios are based on the two different outcomes of these two
assumptions: will the actions of Mongolias leaders be determined by short-term opportunities or long-term
investments, and what will happen to the global demand for commodities. The resulting scenarios present four
starkly different versions of Mongolias future which we think will be most interesting to our readers.
However, these scenarios are not merely intended for reading enjoyment. They can achieve their full
value only when used as tools to dentfy the best possble pth for long-term deelopment
nd progress. When looking at the four different scenarios, it becomes much simpler to identify which
circumstances are desirable for our future, and which ones we must strive to avoid. Thus, by using these
scenarios we must assess the path we are currently taking, and consider our options on how to create a better
future. These scenarios can be utilized for many positive examples of such an application of scenario thinking
methodology to plan for the future. They are useful as a guide to produce an optimal long-term development
policy for Mongolia, and to provide a guide to ultimately enhance Mongolias competitiveness and economic
development.
Thus, with the purpose of hosting in-depth deliberations on long-term, sustainable development policies
for our nation, the Economic Policy and Competitiveness Research Center organized two workshops entitled
Scenarios for Mongolia: Building a Positive Future. Many representatives from the public and private sectors,
as well as academia and international organizations participated in these discussions, providing their invaluable
analytical input into the four scenarios. Our participants proved to be extremely vigorous, discussing thecurrent tendencies in Mongolias economy and societal framework as well as possible future challenges. They
also came up with a list of early-warning signs to indicate which scenario we are heading towards and what
signs we need to be wary of.
The future of Mongolia will depend on the actions of Mongolians. Hence, we must discuss and identify
the necessary steps we must take and implement them ourselves to create a brighter future. We would like
to express our gratitude to participants of the discussions for providing valuable contribution through their
thoughts and ideas for sustainable development for Mongolia. Herewith, we present to our readers the product
of their work that they committed long hours and serious thinking towards.
We are condent that our readers will be able to nd many different possible scenarios for Mongolia.
But let us reect on what these versions of our future look like, and what we must do to make it better and
brighter.
Generl drector B.Lkshm
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SCENaRiOS FOR MONGOLia:
BuiLDiNG a POSiTivE FuTuRE
In June and July 2013, the Economic Policy and Competitiveness Research Center (EPCRC) held
a series of workshops entitled Scenarios for Mongolia: Building a Positive Future. During these
two workshops, notable representatives from government, business, civil society, academia and
international development organizations analyzed four alternative scenarios for the future of Mongolia
in 2025. Through these workshops, the EPCRC engaged and provided these stakeholders with a
neutral platform for multi-stakeholder strategic dialogue on these scenarios. The aim was to identify
actions needed to support the sustainable development of Mongolia towards a brighter future.
Box 1. Scenario Planning
Scenario planning is based on the observation that, given the impossibility ofknowing precisely how the future will play out, a good decision or strategy to adoptis one that plays out well across several possible futures. To nd such a robuststrategy that works across all futures, scenarios are created in plural, such that eachscenario diverges markedly from the others. These sets of scenarios are, speciallyconstructed stories about the future, each one modeling a distinct, plausible world inwhich we might someday have to live and work.
The purpose of scenario planning is not to pinpoint future events but to highlightlarge-scale forces that push the future in different directions. Its about making theseforces visible, so that if they do happen, the planner will at least recognize them. Itsabout helping make better decisions today.
Scenros re:
-Storesbuilt around a methodically constructed plot;
-a toolfor identifying strategic options in the face of long-range uncertainty;
-a frmework nd ocblry for an on-going strategic conversation.
a good set of scenros re:
-Plsblestories;
-Relentto the question at hand;
-Dergentfrom one another;
-Chllengngto our assumptions about how the future will play out.
Source: Global Business Network
Moderate/Stable
Short termopportunities
Long terminvestments
For alternte Scenros
In early 2012, scenario planning experts from consulting group Heminge & Condell came to
Ulaanbaatar and organized workshops amongst Mongolian business, social and political leaders to
discuss the future of the country. The group discussed the range of uncertainties affecting Mongolia,
including economic uncertainties, technological developments, social concerns, environmental issues
and political programs and policies. As a result, they identied the most important external inuences
and the most important decisions that will affect the future of Mongolia. These are as follows:
Wht wll hppen to the globl demnd for commodtes?
-Economic slowdownin China
-World economiccrisis
-New technologiesthat could decrease
commodity demand
Commodity Demand
-Chinese economicboom
-World economicrecovery
-New technologieswill be expensive
Wht wll gde the ctons of Mongoln leders?
-Political, economicand social instability
-Bad scal andmonetary policy
-Corruption, red-tape
Focus of MongolianLeaders
-Political, economicand social stability
-Good scal andmonetary policy
-The Rule of Law
From this work, they developed four alternative futures for Mongolia based on the most important
external inuences and the most important decisions.These scenarios are presented in the following
diagram
Nine White Banners
High commodity demand / Long-term investments
Business, social and political leaders work
together to build a positive future that can be
shared by all Mongolians.
Storm of GobiHigh commodity demand / Short-term
opportunities
The gap between rich and poor widens, and
competitiveness falters as oligarchs and
foreign inuences use political and economic
power for personal gain.
Disappointed DreamsModerate commodity demand / Short-term
opportunities
An ultranationalist party comes to power as
international support falters and antipathy
increases toward government and private
enterprise.
Future PromiseModerate commodity demand / Long-term
investments
Mongolian leaders join together to create a
shared vision and plan to build an economy that
is more open, educated and competitive.
Commodity demandModerate High
Long- term investment
Short-term opportunities
High/Volatile
Focusof
Mongolianlea
ders
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Erly wrnng system
The scenarios represent four very diff erent, very challenging and yet plausible worlds that stakeholders
in Mongolia may face in the future. Thus, with the help of the participants, we have come up with a
list of Early Warning Signs that provide an indication to identify the path Mongolia is on.
Annex. List of early warning system
FuTuRE PROMiSEPoltcs
Governance is transparent with increased civic participationRule of law is consolidated
Public service is prompt and transparentEconomy
State involvement is minimal with more opportunites for private sec-
tor participationSectors other than mining, especially agricultural sector experiences
rapid growth. Exports of wool, cashmere and leather products in-crease
Stable MNT exchange rate with low inationTransparent and accountable budget management. The Governmentdebth will increase (by issuing bonds etc.), but the proceeds shall
only be invested in highly protable projects.The environment for investment improves, with nancial and capital
markets expands.Enronment
Social movements against environmental degradation will heighten
due to insufcient environmental rehabilitation from mining activi-ties.
Water prices surge and water saving movements begin due to declinein water reserves.
Socety
Strong middle class. Strong enforcement of quality standarts for com-modities and servies.
Advancement in education system and quality.Increase in employment. Cash hadnouts cease to exist, with only
targeted welfare programs for those in-need.infrstrctre
Major energy projects implemented jointly with foreign investors,
with national energy demand fullled domestically.Investments in road and rail networks expand, and budget income is
supplemented through transportation and transit services.Science and technology are prioritized by the state, with knowledge-intensive industries and their exports being under special state con-
sideration.
9 WHiTE BaNNERSPoltcs
Political stability and good governance are prevailing.
Clear and stable legal framework is materilizing.High quality public service.
Economcs
Public and private partnership will be introduced and employed broadly.Large income inux due to the mining boom. More value added products are
being producedSigns of Dutch Desease will be observed. MNT gains, surging ination.
Large sums from the National Wealth Fund would be invested in other sectorsas well as to markets abroad. The Government will turn out to be extravagant,investing even in not so protable projects.
As foreign investment pour in, nancial sector will grow to be healthy withample supply of funds.
EnronmentCompanies will have higher social responsibility, implementing various greenprojects. Environmental rehabilitation from mining activities is executed in high
quality.Water purication and recycling are broadly used. Clean water reserves will
increase.Socety
Even though Mongolia would be a high cost country, Mongolians will have a suf-
cient income that can support a high standard of living. Consumption of luxurygoods and services will increase.
High number of Mongolian students would be studying in top universities ofthe world.
Supply of professional workforce with higher level of education will increase. Av-erage wage and welfare amount would be similar to those developed countries.People will start to show signs of laziness and inactivity.
infrstrctreCoal liquefaction and renewable energy technologies will be introduced. Mongo-
lia will become an energy exporting nation.Road and transport sector will be developed into a world class system.Large amount of investment is made in developing scientic infrastructure. The
nation strives to be a knowledge-based economy.
DiSaPPOiNTED DREaMS
PoltcsPolitical instability.
Uncertain legal environment.An ultra-nationalist, Populist Political Party would claim resources under
state authority.Economy
State intervention overwhelms the private sector.
Mining sector in a state of decline, the whole economy is supported bylivestock and agricultural i ndustry.
Deation rises and industrial output drops..Economic and nancial crises is caused by dual decits in budgetand foreign trade.
By pressuring and turning foreign investors out, Mongolia faces stag-gering amount of penalties due to breaches of contracts.
EnronmentEnvironmental pollution peaks due to a vast number of closed andpoorly rehabilitated mines..
Contagious diseases are frequent due to drinking water scarcity andpollution.
SocetyMongolia faces poverty and famine, internal struggles and clashes. Com-modities including food, water, energy and other imported goods are scarce.
Education and health sectors are in ruins.
Mass unemployment leads to increased alcoholism and crime rate whileleaders will continue with their populist promises. Freedom of speech is
halted in order to suppress social outrage.infrstrctre
Declines in imports will lead to energy scarcity.
Insufcient funds for infrastructure investment. Outdated and wreckedroads and railroads are no longer suitable for use.
Technological and scientic research are long forgotten..
STORM OF GOBi
PoltcsMongolian politics is dominated by the interests of oligarchic businesses and
political power. Fight for control results in unstable and corrupt politics.Distorted and unstable legal environment.
State intervention reaches its worst, with overabundance of bureaucracy andpressure, resulting in widespread corruption.
Economcs
Economy now rests in the hands of a few political gures, oligarchs and mo-nopolies.
Economy is dependent solely on mining and resource exports.Rapid growth of ination.Overwhelming increases in the budget decit and foreign debt.
Even though a large amount of income keeps owing, it is pocketed by a limitednumber of politicians and foreign investors. Shadow economy expands.
EnronmentDue to unregulated mining activities, environmental degradation and deserti-cation become increasingly common.
Widespread water scarcity.Socety
Due to unregulated mining activities, environmental degradation and deserti-cation become increasingly common.Quality of public schools declines leading to be frequent strikes by teachers.
Children of the afuent will attend exclusive private schools or schools abroad.Even though there are vast numbers of unemployed Mongolians, mining and
construction sectors would employ equally large number of Chinese migrantworkers.
infrstrctreEnergy imports increase, domestic energy market is now fully dependent onimport
Construction of roads and rails intended only for transportation of minerals.Due to low quality and poor maintenance of other infrastructure, costs related
to damage and to the environment increase..Technological and scientic infrastructure are gravely outdated; Mongolia fallsfar behind when compared to world advancements.
Box 2. Mining as Mongolias main economic driver
Due to the huge mining developments underway, Mongolias economy has beenexperiencing rapid growth in recent years. Mining currently accounts for about 20%of GDP, 60% of industry, and 90% of exports. Hence, it is appropriate to considermining as Mongolias economic driver.
Mongolian GDP growth
Share of the mining industry for Mongolias GDP, Industry and Exports
Unfortunately, over-dependence on mining is already taking its toll on the Mongolianeconomy through uctuations of world commodity prices. For instance, economicgrowth fell from 17.3% in 2011 to 12.3% in 2012 due to volatility in the miningindustry. Moreover, Mongolias export and budget income shrank in the rst half of2013 due to the decrease in coal demands and prices caused by Chinese economicslowdown. In the rst quarter of 2013, GDP growth was a mere 7.2% from theyear before. In addition, due to a dual decit in the government budget and tradebalance MNT rate fell drastically against USD and other major currencies.
In order to maintain a reasonable economic growth pace and to achieve sustainablegrowth, Mongolia still needs to shed its over-dependence on mining by providing thenecessary support to other sectors.
There were many great ideas proposed by workshops participants during discussions.This included establishing a sovereign wealth fund, developing Mongolias agricultureand tourism sectors, and supporting a knowledge-based economic structure. Theseideas are considered in the Solving the Problems sections for each of the scenariosbelow.
-5
0
5
10
15
20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
in percentage
0
10
20
30
40
50
60
70
80
90
100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GDP
Industry
Export
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The list of Early Warning Signs identied in the workshops and included here provides us with
an indication that Mongolia is heading in a particular direction towards one of the scenarios.
However, it is not complete; indeed, no list of early warning signs ever can be fully complete.
The purpose of the Early Warning System process is to broaden and to enrich the list of early
indicators by monitoring the changing environment over time.
During the second workshop on July 5, by accessing the list of Early Warning Signs participants
identied Mongolias current development tendency. By giving scores from 1 to 5 to each of the
16 signs for all 4 scenarios, participants agreed that most of the indications are pointing towards
the direction of the Storm of Gobi more than the other scenarios. On the other hand, there were
some strong and some early signs for the other three scenarios: Nine White Banners, The Future
Promise and the Disappointed Dreams. The results of the questionnaries are presented in the
Early Warning Signs part of the analysis for each scenario below.
Solng the Problems
Anything can happen in the future. Thus, to test and understand strategies under different
circumstances, the workshop participants identied issues and opportunities in each of the four
scenarios that Mongolia may face. Participants were then asked to come up with policies and
measures to overcome the issues, and strategies to employ the opportunities identied to foster a
better future for each of the scenarios.
MONGOLia iN 2025
annex (Erly wrnng sgn)
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SCENaRiO 1: FuTuRE PROMiSE
Moderate commodity demand / Long-term investments
Ths s world n whch
The promise of Mongolias mineral wealth is deferred, as commodity demand declines gradually to
more moderate levels.
Economic, political and social pressures increase, leading to widespread recognition of the need for
reform.
Mongolian leaders join together to create a shared vision and plan to build an economy that is more
open, educated and competitive.
Tmelne
Erly Wrnng Sgns
Results of survey question Are these signs observed in Mongolia today
1 - Not observed
2 - Seldom observed
3 - Sometimes observed
4 - Often observed
5 - Always observed
Chinas economic growth slows;copper and coal prices declinegradually from their peak.
A new Parliament of technocrats is elected with amandate for targeted reforms this would begin with
judicial reform, measures to establish a sovereign wealthfund and plans for constructing infrastructure projects.
Government budget crisis, high-prolecorruption cases and continued povertyand/unemployment lead to widespreadcalls for reform.
2013 2025
Mongolia attracts global investment onthe basis of its stability and strategicplans for development.
Where there s wll, there s wy
10 11
Scenario 1: Future Promise
2,7
2,5
2,6
2,2
2,2
2,1
2,1
2,6
2,9
2,1
2,1
2,1
2,2
2,2
2,2
1,9
1 2 3 4 5
Governance is transparent with increased civic participation
Rule of law is consolidated
Public service is prompt and transparent
State involvement is minimal with more opportunites for private sector
participation
Sectors other than mining, especially agricultural sector experiences rapidgrowth. Exports of wool, cashmere and leather products increase
Stable MNT exchange rate with low inflation
Transparent and accountable budget management. The Government debtwill increase (by issuing bonds etc.), but the proceeds shall only be
The environment for investment improves, while the financial and capitalmarkets expands.
Social movements against environmental degradation will heighten due toinsufficient environmental rehabilitation from mining activities.
Water prices surge and water saving movements begin due to decline inwater reserves.
Strong middle class. Strong enforcement of quality standarts for
commodities and servies.
Advancement in education system and quality.
Increase in employment. Cash handouts cease to exist, with only targetedwelfare programs for those in-need.
Major energy projects implemented jointly with foreign investors, withnational energy demand fulfilled domestically.
Investments in road and rail networks expand, and budget income is
supplemented through transportation and transit services.
Science and technology are prioritized by the state, with knowledge-intensive industries and exports under special state consideration.
Future promise
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isses nd Opportntes
Key sses: Key opportntes:
Drop in budget revenue Economic diversication
Increase in foreign debt Increasing private sector participation and initiatives
Social discontentGood governance
Rapid investment decline for a short period of time Capital market developmentGood practices on budget policy and planning areintroduced extensivelyForeign relations ourish
Solng the Problems
In this scenario, Mongolias leaders will have the necessary foresight and willingness to
promote sustainable development despite nancial limitations. Hence, it is necessary to
diversify the nancial sector, creating more income sources, and to increase private sector
participation. The following policies and steps were recommended:
1. Fosterng knowledge-bsed economy. Science and technological sectors are
priorities, and innovation is encouraged and supported. Only through such efforts will the
livestock and agriculture sector, and information technology sector be able to produce value
added products for export diversication. The following steps are recommended within this
policy:
Training of highly professional workforce, through improvements in education;
Developing innovation infrastructure, establishing science parks, research and
development centers, and technology transfer centers;
Provide incentives for the private sector to strive for innovation, pushing them to launch
new, competitive products for international markets.
2. Promotng prte sector prtcpton.The State should endeavor to share its load,
creating more opportunities for the private sector. Enforcement of laws on concessions, and
engaging private sector through public and private partnership are equally important.
3. Promotng trnsprency nd ncresng cc prtcpton:
-Consolidating rule of law. Private sector and civil society to monitor and engage in the
process of law drafting, debating, and adoption;
-Facilitating budget transparency. Create mechanisms where citizens, private sector, and
civil society are involved in the budget discussion, and are able to monitor its implementation.
This could be done by hosting regular open deliberations during budget planning;
-To instill the mindset I am a taxpayer. Thus, I must participate in budget decisions, and
support civic participation and initiatives. Initiate taxes for herders as to turn every working
person into a taxpayer.
4. Dersfyng the nncl mrket:
Since budget income is low and foreign investment has declined under this scenario,
the Government should lead the way in employing its own nancial tools (issuing bond
on international markets etc.), providing necessary opportunities and assistance to the
private sector;
-
-
-
-
Strengthening capital markets;
Improving the insurance systems;
Facilitate the establishment of venture investment funds, and support innovation;
Attract international investment banks through favorable conditions.
5. Dscoerng new mrkets. Closely observe foreign relations and regional cooperation.
Initiate free trade agreements, and discover new markets for Mongolian exports.
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Scenario 1: Future Promise
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Scenro 2: Nne Whte Bnners
High commodity demand / Long-term investments
Ths s world n whch
The promise of Mongolians mineral wealth is fullled, with high levels of demand for commodities,
particularly from China.
Pressures of growth create widespread challenges ination, currency appreciation, social turmoil
and resource constraints.
In the midst of these pressures, business, social and political leaders work together to build a
positive future that can be shared by all Mongolians.
Tmelne
Erly Wrnng Sgns
Results of survey question Are these signs observed in Mongolia today
1 - Not observed
2 - Seldom observed
3 - Sometimes observed
4 - Often observed
5 - Always observed
China achieves strong growth andpolitical stability smooth transferof power, as controlled expansionextends across Chinese provinces(including inner Mongolia).
Leaders ght special interests and join withtechnical experts to build competitiveness
sovereign wealth fund, free tradeagreements, and productive investments ineducation, healthcare and infrastructure.
Mongolian mining surges severe case of Dutchdisease takes hold, with growing wealth, needfor skilled workforce and clear evidence of failednational leadership.
2013 2025
Growth brings both opportunities andchallenges economic development,political power, social change,environmental vulnerability andpressures to control resources.
Mongolians manage growth to become globalleaders in mining and a model for resource-driven development.
Scenario 2:Nine White Banners
a rsng tde lfts ll bots
2,3
1,9
1,9
2,1
2,2
2,4
2,3
2,2
2,0
1,9
2,1
2,7
2,2
2,1
2,2
2,2
1 2 3 4 5
Politicalstability and good governance areprevailing.
Clear and stablelegal framework is materilizing.
High qualityp ublicservices.
Publicand privatepa rtnership willb eintroduced and employed broadly.
Largeincomeinfluxdue totheminingboom. More valueadded products arebeingproduced
Signs ofDutch Deseasewillbe observed. MNT gains, surginginflation.
Largesums from the Soveriegn Wealth Fund would beinvested in other sectors as well
as to markets abroad. TheGovernment will turn out to beextravagant, investingevenin not sop rofitableprojects.
As foreign investment pour in, financialsector willgrow tobe healthy with amplesupplyoffunds.
Companies willhavehigher socialresponsibility, implementingvarious greenprojects. Environmentalrehabilitation from mining activities is executed in high
quality.
Water purification and recyclingare broadlyu sed. Clean water reserves will increase.
Even though Mongolia would bea high cost country, Mongolians will havea sufficientincomethat can support a high standard ofliving. Consumption ofluxury goods and
services will increase.
High number of Mongolian students would bestudying in top universities ofthe world.
Supplyof professionalworkforce with higher levelof education willincrease. Averagewagean d welfarea mount would besimilar tothos edeveloped countries. Peoplewill
start toshow signs of laziness and inactivity.
Coalliquefaction and renewableenergy technologies willbe introduced. Mongolia willbecomea n energyexporting nation.
Road and transport sector willbe developed intoa world class system.
Nine White banners
Large amount ofinvestment ismade in developingscientic infrastructure.The
nationstrivesto be a knowledge-basedeconomy.
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isses nd Opportntes
Key sses: Key opportntes:
Low economic diversication Good nancial capabilities
Environmental degradation Green development
Increase in laziness due to rel iance on mining sector Proper income distribution mechanism
Growing pains or insufcient resources to catch up with rapideconomic growth (workforce etc.)
High quality standards
Signs of Dutch disease Well-developed infrastructure
Risk of unprotable investments Good governance
Human development, humane society
Solng the problems
Mongolians can learn from the United Arab Emirates, a prime example of how this scenariocan eventuate. Afuent and well-off Mongolians are likely to face the risk of employingimmigrant workers for blue collar jobs, with local Mongolians soon becoming lazy andself-indulgence due. The following policies and programs are recommended:
1. Mntnng nd fosterng trdtonl modes of thnkng nd lng.Since therewould be great nancial capabilities to back various projects, Educated Mongolian programshould be launched to promote higher level education, productivity, and creativity amongMongolians. Within this framework, the following measures are recommended:
Implementing programs intended at motivating Mongolians to learn, to strive for higher
education, and to work productively;
Support Mongolian families;
Proper control over immigrants and migrant workers;
Maintaining and further promoting national traditions, culture, and heritage.
2. accmlte sngs. Creating sufcient savings is essential in ensuring not only thepresent happiness but also the future wellbeing of Mongolia. Along with smart and savvywealth management and risk management, the following steps should be implemented:
Certain percentage of income to be accumulated in a sovereign wealth fund for possible
future predicaments;
Turn cash from wealth funds into tangible wealth in order to ensure future wealth.
Invest in top companies of the world at that time;
3. Economc derscton.Devote mining incomes to strengthen other vital sectors:
Creating and fortifying knowledge-based economy;
Supporting industries with value-added output;
Developing animal, agriculture, light industry, and tourism sectors.
4. Perfectng the ccontblty mechnsm. Effective accountability mechanismsshould be introduced, and political, economic, and social transparency should be upheld.Civil society as well as NGOs should join forces in monitoring the activities of the state, and
building of the capacity of citizens as well as themselves.
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-
-
-
-
-
-
-
-
SCENaRiO 3: STORM OF GOBi
High commodity demand / Short-term opportunities
Ths s world n whch
The promise of Mongolias mineral wealth is supported by high yet volatile demand forcommodities.
A global battle for control of resources leads to expanded corruption and exploitation by forces bothinside and outside Mongolia.
The gap between rich and poor widens, and competitiveness falters as oligarchs and foreign inuences
use political and economic power for personal gain.
a mss s s good s mle
Scenario 3:Storm of Gobi
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Tmelne
Erly Wrnng Sgns
Results of survey question Are these signs observed in Mongolia today
1 - Not observed
2 - Seldom observed
3 - Sometimes observed
4 - Often observed
5 - Always observed
Global economic recovery andcontinued growth of Chinaincrease demand for copper.
Growing income disparity asthe resource curse takes hold
politicians continue spending.
Mongolian politics is dominated bya ght for control, with widespreadcorruption and a blurring of businessand political power.
2013 2025
Exploitation by foreigninterests is clear, with ghtfor control of resources.
Economy is controlled by oligarchs anddominated by mining and government.
isses nd Opportntes
Key sses: Key opportntes:
Resource curse Increased FDI in mining
Social inequality, increasing gap between rich and poor Investment in infrastructure
Populism, oligarchs in business and politics Pre-conditions for reform
Corruption and bribery
Outow on wealth and money
Ecological degradation
Falling into the mercy of major investors
Solng the problems
As the gravest challenge in this scenario is the resource curse, it would be most important
to overcome this condition. The operations of major mines as well as the distribution of
income must become more transparent and open to the public, so that a broader range of
stakeholders can be engaged in monitoring and control. Tax mechanisms and policies must
be upgraded to expose the shadow economy.
1. Fosterng trnsprent nd responsble mnng sector:
Laws should be strictly enforced. Serious retributions should be forced for crimes such as
illegal exploration and extraction of minerals, and illegal spending of mining-generated
income.
Proper use of resources and manufacturing of value-added products should receive
state support;
Strengthening corporate social responsibility. There should be assistance with facilitation
and capacity building for citizens in overseeing operations of mining companies.
2. Proper spendng of ncome:
Establishment and effective management of sovereign wealth funds;
Only invest in protable projects which would benet the whole society;
Civic monitoring and control over the budget planning and sovereign wealth fund
spending.
3. Spport ndstrlzton nd mport sbsttton
Trade tax subsidies;
Promote a highly professional workforce. Provide student loans to send students to
universities abroad. Establish high quality vocational institutes such as the Mongol-
German Technological University, offering positions for international professors and
academics, and providing jobs for graduates.
-
-
-
-
-
-
-
-
Scenario 3:Storm of Gobi
2,3
2,5
2,4
2,9
3,6
2,8
2,7
2,4
2,6
2,4
2,1
2,6
2,5
2,2
2,3
2,1
1 2 3 4 5
Mongolian politics is dominated by the interests of oligarchic businesses and politicalpower. Fight for control results in unstable and corrupt politics.
Distorted and unstable legal environment.
State intervention reaches its worst, with overabundance of bureaucracy and pressure,
resulting in widespread corruption.
Economy now rests in the hand s of a few political figures, oligarchs and monopolies.
Economy is dependent solely on mining and resource exports.
Rapid growth of inflation.
Overwhelming increases in the budget deficit and foreign debt.
Even though a large amount of income keeps flowing, it is pocketed by a limited
number of politicians and foreign investors. Shadow economy expands.
Due to unregulated mining activities, environmental d egradation and desertification
become increasingly common.
Widespread water scarcity
Due to unregulated mining activities, environmental d egradation and desertificationbecome increasingly common.
Quality of public schools declines leading to frequent strikes by teachers. Children ofthe affluent will attend exclusive private schools or schools abroad.
Even though there are vast numbers of unemployed Mongolians, mining andconstruction sectors would employ equally large number of Chinese migrant workers.
Energy imports increase, domestic energy market is now fully dependent on imports
Construction of roads and rails intended only for transportation of minerals. Due to
low quality and poor maintenance of other infrastructur e, costs related to damage
Technological and scientific infrastructure are gravely outdated; Mongolia falls farbehind when compared to world advancements.
Storm of Gobi
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Scenarios for Mongolia: Building a Positive Future
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NEXT STEPS
We would never want to live in world similar to The Storm of Gobi, where politicians and
oligarchs employ economic power for their own interest, and where there is excessive
income disparity. However, some signs indicating the emergence of such a future are
already beginning to become visible. Workshop participants unanimously stressed that
the economy is becoming more and more dependent on mining and resource exports,while ination increases, and budget and foreign trade decits soar. Development
policies deviate and change depending on which political party is in power, with an
unstable and unclear legal framework. As previously mentioned, results of our survey
of participants show that all these signs suggest Mongolia is heading towards the Storm
of Gobi scenario. In other words, the Early Warning System warns us that we are on a
wrong path.
Then, what should we do to get on the path to the most favorable scenario, Nine White
Banners? We have begun a discussion about the establishment of sovereign wealth
funds. Talks have been held on reinforcing sectors other than mining, and economic
diversication. Students studying at top universities of the world are to receive fullnancial support from the state. We also aim to create a knowledge-based economy. Such
policies directed at future well-being could lay the grounds for Mongolias development.
Yet, even the scenario Nine White Banners has its issues and disadvantages. Then
what should we do in order to maintain a prosperous future?
It should be noted that some of the participants observed that the scenario Nine White
Banners greatly reminded them of objectives put forward on the Mongolias Millennium
Development Goals based Comprehensive National Development Strategy. Moreover,
initiatives of the New Government for Changes (i.e. the Democratic Party Government
formed in 2012) for economic diversication was deemed to lead towards to scenario
Future Promise. In other words, we do have good medium to long term policies in
place. But the question remains on how effectively they are being implemented, and
how to make them even better. And to answer these questions, we can employ our
scenarios.
As scenarios are not predictions, it is highly unlikely that any of these scenarios will
emerge exactly as they have been foretold. Rather the future will most likely consist of
some combination of all of these scenarios to different degrees. However, as scenarios
can answer the question What if?, we can use them to explore a wide range of
uncertainties at the global and local levels and to cast forecasts on what might happen
in the future. Hence, we can be prepared for uncertainties in the future, and to take
appropriate action if need be.
Where do the current signs in political, social, and economic sphere lead us? How do
we correct it, if we are on the wrong path? How to correct it, if we are on the wrong
path? What should we do to create a brighter, more prosperous future? This booklet
is a product of intense discussions our participants had on these important subjects.
Using these four scenarios on the future Mongolia, you could also try to answer these
questions yourself. Are you full of ideas on how to make our future even better? Then
we are happy to inform that you are welcome to participate in our next round of
discussions.
Using scenro plnnng, many more rounds of talks will be held on ways and
means to foster the sustainable and long-term development for our country. Because
circumstances and situations surrounding us evolve and change constantly, we will
revisit these scenarios annually, and renew our list of prevention signs to once again
assess if we are still on the right path.