Download 54.8 MONGOLIA - The Heritage Foundation

MONGOLIA
I
WORLD RANK:
129
REGIONAL RANK:
29
ECONOMIC FREEDOM STATUS:
MOSTLY UNFREE
n an effort to accelerate its transition to a competitive economy, Mongolia has adopted policies to liberalize markets and
develop the financial sector. However, long-term economic
development will still require further critical reforms. The evolving regulatory framework governing investment remains opaque,
injecting uncertainty into investment decisions.
The weak rule of law and lingering corruption are additional
drags on the economy. Institutional reforms and continued
efforts to streamline public administration are critical to sustaining economic growth. Management of public finances has
deteriorated notably, and growing budget deficits have pushed
the level of public debt to more than 75 percent of GDP.
ECONOMIC FREEDOM SCORE
54.8

( ▼ DOWN 4.6 POINTS )
0
50
60
70
80
60.4
60.9
REGIONAL AVERAGE
WORLD AVERAGE
(ASIA-PACIFIC REGION)
NOTABLE SUCCESSES:
Trade Freedom
100
CONCERNS:
Rule of Law, Investment Freedom,
and Government Spending
OVERALL SCORE CHANGE
SINCE 2013:
–6.9
QUICK FACTS
FREEDOM TREND
80
70
60
50
POPULATION:
3.0 million
UNEMPLOYMENT:
7.1%
GDP (PPP):
$36.1 billion
2.3% growth in 2015
5-year compound
annual growth 10.3%
$12,147 per capita
INFLATION (CPI):
5.9%
FDI INFLOW:
$195.1 million
PUBLIC DEBT:
76.5% of GDP
40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2015 data unless otherwise noted. Data compiled as of September 2016
BACKGROUND: Since the adoption of a new constitution in 1992, Mongolia has transformed from a
closed society ruled by a single-party Communist system into an open society and a dynamic multi-party
democracy. This transition has been accompanied by the gradual introduction of free-market reforms and
relatively well-maintained political stability. While improving overall relations with the U.S., Japan, and
South Korea, Mongolia has also maintained strong ties with Russia and China. President Tsakhiagiin Elbegdorj, whose Democratic Party coalition controls parliament, is serving his second term. Agriculture and
mining remain the most important sectors of the economy. Uncertainty over investment rules has caused
investment in the mineral sector to ebb and flow.
158
2017 Index of Economic Freedom
KEY:
WORLD AVERAGE
12 ECONOMIC FREEDOMS | MONGOLIA
RULE OF LAW
88th
GOVERNMENT SIZE
136th
103rd
100
100
80
80
70
70
60
60
50
50
119th
179th
87.1
57.6
0.0
Tax
Burden
Government
Spending
Fiscal
Health
Rank
MONGOLIA
37th
0
51.3
28.4
36.8
Property
Rights
Judicial
Effectiveness
Government
Integrity
Property and contractual rights are recognized,
but enforcement is weak. The government lacks
the capacity to enforce intellectual property rights
laws. The judiciary is independent but inefficient
and vulnerable to political interference. Pervasive
corruption stems from a political culture that places
a high value on relationships. Graft is endemic, and
weak institutions do not enforce anticorruption measures effectively.
81st
23rd
The individual income tax rate is a flat 10 percent,
and the top corporate tax rate is 25 percent. Other
taxes include a value-added tax and an excise tax. The
overall tax burden equals 23.7 percent of total domestic income. Government spending has amounted to
37.6 percent of total output (GDP) over the past three
years, and budget deficits have averaged 9.4 percent
of GDP. Public debt is equivalent to 76.5 percent
of GDP.
OPEN MARKETS
136th
100
100
80
80
70
70
60
60
50
50
0
67.2
76.6
72.3
Business
Freedom
Labor
Freedom
Monetary
Freedom
The regulatory framework continues to evolve,
although the pace of reform has been sluggish. Labor
regulations are relatively flexible, but the labor market
lacks dynamism. The nonsalary cost of employing a
worker is moderate, and dismissing an employee is not
burdensome. Faced with a budget deficit, the government is contemplating the sale of some state-owned
enterprises such as power plants, coal companies, and
the stock exchange.
0

REGULATORY EFFICIENCY
0
109th
132nd
39th
74.9
45.0
60.0
Trade
Freedom
Investment
Freedom
Financial
Freedom
Rank
Trade is important to Mongolia’s economy; the
value of exports and imports taken together equals 87
percent of GDP. The average applied tariff rate is 5.0
percent. The judicial and regulatory systems impede
foreign investment, and state-owned enterprises distort the economy. The limited availability of long-term
loans and costly collateral requirements make access
to credit a challenge for small and medium-size firms.
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