Economy of The Mongolian People's Republic - Structure of The Economy

Structure of The Economy

Socialist development transformed Mongolia from a predominantly agrarian, nomadic economy in 1921 into a developing, agricultural-industrial economy in the late 1980s. In 1985 a reported 18.3 percent of produced national income was derived from agriculture, 32.4 percent from industry, 4.9 percent from construction, 11.2 percent from transportation and communications, 31.6 percent from domestic trade and services, and 1.6 percent from other sectors. Sixty percent of disposable national income went to consumption, and 40 percent went to accumulation. Fixed assets totaled about 38.9 billion tugriks, of which 66.5 percent were productive fixed assets, including livestock, and 33.5 percent were nonproductive. Industry and construction accounted for 38.1 percent of the productive fixed assets; agriculture, 16 percent; transportation and communications, 9 percent; and domestic trade and services, 3.4 percent. Investment totaled 4.624 billion tugriks, 97.9 percent of which went to the state sector, and 2.1 percent, to the cooperative sector. During the Seventh Five-Year Plan (1981-85), 68.9 percent of investments went into the productive sectors of the economy, and 31.1 percent, into nonproductive sectors. Industry and construction received 44.7 percent of investment during this period; agriculture, 13.9 percent; transportation and communications, 9.0 percent; and domestic trade and services, 1.3 percent. The Eighth Five-Year Plan (1986-90) called for increasing produced national income by 26 to 29 percent and for raising investment by 24 to 26 percent, of which 70 percent was to go to developing material production.

In the late 1980s, Mongolia was divided into three economic regions. The western region (Bayan-Ölgii, Khovd, Uvs, Zavkhan, and Govi-Altai aimags), with 21 percent of the nation's population, was predominantly agricultural. The western region had 32 percent of Mongolia's livestock and produced about 30 percent of its wool and meat. Local industry was engaged in processing of animal husbandry products, timber, minerals, and building materials. Transportation was predominantly by motor vehicles.

The central economic region (Arkhangai, Bayankhongor, Bulgan, Darkhan-Uul, Dornogovi, Dundgovi, Khövsgöl, Ömnögovi, Övörkhangai, Selenge, Töv aimags, and Ulan Bator) was the dominant producer. The region had 70 percent of Mongolia's population (including the cities of Darkhan, Erdenet, and Ulan Bator); 55 percent of its territory; 75 percent of its arable land; 90 percent of surveyed coal deposits; and 100 percent of copper, molybdenum, iron ore, and phosphate deposits. This region accounted for 80 percent of gross industrial production, 90 percent of light industrial production, and 80 percent of food industry production, 75 percent of coal production, and 100 percent of copper-molybdenum, iron ore, and phosphate mining. It also accounted for 60 percent of gross agricultural production, 60 percent of milk production, 50 percent of meat production, and 80 percent of grain, potato, and vegetable production.

The eastern economic region (Dornod, Khentii, and Sükhbaatar aimags) had 9 percent of Mongolia's population, 20 percent of the arable land, and 15 percent of the livestock. The region contributed 15 percent of gross meat production and 13 percent of wool production. Grain production on large state farms hewed out of virgin lands contributed 90 percent of the region's agricultural output. The major industrial center was Choibalsan, which produced 50 percent of regional gross industrial output.