Impact of the Mining and Agriculture Sector on the Mongolian Economy

Increasing the use of natural resources can improve the country’s wealth, but it has adverse effects caused by improper usage, and it is non-renewable. The depletion of natural resources is a global environmental issue that threatens the livelihoods of billions of people. Moreover, not all resource-rich countries are highly developed. Mongolia is one of the natural resources-rich countries in the world. The agricultural sector is Mongolia’s traditional economic sector, and it still plays an essential role in the country’s economy. This paper investigated the interrelation between the agriculture and the mining sectors and their impact on Mongolia’s economic growth. A multiple-stage regression model was used to analyse the selected variables’ time series data over 20 years of Mongolia. In addition to the model’s sectoral data per capita wealth, other control variables are added to explain economic convergences, human capital impact, and government size. Result proves that the mining sector has a substantial impact on the economic growth of Mongolia. However, agricultural sector growth does not depend on the mining sector. The high dependency from one sector, particularly the extractive sector, warns against the sustainable development of the country’s economy. Therefore, it is essential to support agriculture and other secondary sectors based on renewable natural resources and agriculture.

JEL classification: O41, O53, Q32