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South-South Cooperation: How Mongolia Learned from Chile on Managing a Mineral-Rich Economy


  • Van den Brink, Rogier

    () (World Bank)


Mongolia’s mineral-rich economy was hit extremely hard by the global downturn during 2008–9, when copper prices plunged, external demand fell, and growth collapsed. The shock exposed serious underlying weaknesses in the management of the country’s natural resource wealth, particularly the lack of policies to insulate the economy from commodity cycles and real exchange rate appreciation pressures, an inadequate safety net, and poor public investment planning. These issues gained further urgency with the signing of a major copper mining deal in 2009 that further increased the country’s mineral dependence. As part of its reform efforts and with the assistance of the World Bank and the International Monetary Fund (IMF), the government began an intensive south-south exchange, notably with Chile, another major copper producer, on strengthening the policy environment. The dialogue proved critical in the passage of several landmark laws within the space of a few years, including a fiscal stability law modeled after Chile, and the accompanying integrated budget and procurement and social welfare laws. These reforms will be crucial in managing the boom-bust cycle of mineral prices and mitigating Dutch disease effects by anchoring a prudent countercyclical fiscal policy, strengthening public financial management, increasing savings, and providing a fiscally sustainable social safety net targeted to the poor.

Suggested Citation

  • Van den Brink, Rogier, 2012. "South-South Cooperation: How Mongolia Learned from Chile on Managing a Mineral-Rich Economy," World Bank - Economic Premise, The World Bank, issue 90, pages 1-7, September.
  • Handle: RePEc:wbk:prmecp:ep90

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    1. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
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    6. Nazmul Chaudhury & Jeffrey S. Hammer, 2004. "Ghost Doctors: Absenteeism in Rural Bangladeshi Health Facilities," World Bank Economic Review, World Bank Group, vol. 18(3), pages 423-441.
    7. repec:pri:rpdevs:understanding_ppps_complete_with_abstract_14nov08.pdf is not listed on IDEAS
    8. repec:pri:rpdevs:understanding_ppps_complete_with_abstract_14nov08 is not listed on IDEAS
    9. Michael Kremer & Nazmul Chaudhury & F. Halsey Rogers & Karthik Muralidharan & Jeffrey Hammer, 2005. "Teacher Absence in India: A Snapshot," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 658-667, 04/05.
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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation


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