 June, 2007 - Over the past 10 years, Mongolia has shifted from a plan-based state economy to one in which private sector competition drives significant growth. Within infrastructure, considerable progress in rollout has been supported by a sector investment rate as high as 10 percent of GDP. As a result, the country has moved from a situation of isolation and limited utility access to spreading the benefits and quality of network connectivity.Looking forward, urbanization, focused around Ulaanbaatar and mining areas, the exploitation of new mines, and continued growth in Russia-China trade all provide hope for rapid economic advance. For example, Russia-China trade transiting Mongolia has increased by 250 percent over the period 2000–05, and such growth can be expected to continue. The Government of Mongolia (GoM) predicts 7–10 percent annual GDP growth rates in the coming 10 years.
Infrastructure is key to unlocking these prospects. Experience around the world has shown that a viable infrastructure sector is a condition to support continued economic growth. Experience has also shown that lack of infrastructure—or its unreliable and costly supply—hampers development. Infrastructure is vital to connect countries to global markets and strengthen domestic trade. It also plays a central role in developing stocks of human capital—improving health and education outcomes.
Mongolia is no exception. Indeed, Mongolia’s geographic and climatic features make efficient and environmentally sustainable provision of quality infrastructure services even more vital than in other countries. For example, the country’s cold climate meathat an average school in Mongolia uses 16 percent of its operating budget on energy—compared to 1 percent on books.
Efficient provision of infrastructure services will also contribute to proper mitigation of air, water, and soil pollution, particularly in Ulaanbaatar. This is an area not covered in this report, although it deserves urgent attention.
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