Mongolia’s billions of dollars worth of copper, gold, uranium and coal reserves promise an influx of wealth for the country but they also may spawn a crisis, says a Bloomberg analytical report. Sudden prosperity can overwhelm an economy, exposing it to commodity-price swings. Mongolia’s leaders say they are determined to avoid this syndrome, known as “Dutch Disease” — a sudden surge in wealth that ultimately hampers expansion.
Working with the Washington-based World Bank, they are dispatching officials to nations such as Chile, which successfully harnessed its copper resources to help drive growth. They are also leveraging their democratic system to build support for policies including greater investment in transportation and a new budget law aimed at curbing the impact of volatile metals prices.
To beat the resource curse, Mongolia’s Government has proposed a law based on a Chilean measure that will save surplus revenue from mineral royalties when prices are high to stabilize the budget when they fall. The country is overhauling its social-welfare system to target aid only to the poor. It also plans to improve roads and railroads, creating access to new mines and helping herders bring cattle and sheep to market.