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Impact on the Mongolian Economy of Foreign Direct Investment in the Coal-Export Sector

Author

Listed:
  • Ragchaasuren Galindev
  • Nyambaatar Batbayar
  • Lulit Mitik Beyene
  • Oyunzul Tserendorj
  • Unurjargal Davaa

Abstract

This paper developed a recursive dynamic Computable General Equilibrium model to examine the impact on the Mongolian economy of Foreign Direct Investment (FDI) in the coal-export sector. Based on a 2014 Social Accounting Matrix, the model simulated two scenarios during the 2016-2025 period: 1) a business-as-usual scenario as a reference case that replicated the latest IMF projections for main macroeconomic variables; and 2) an FDI scenario in which the coal-export sector received 1 trillion MNT over four years between 2019-2022, which increased production capacity in 2023. Although FDI increased GDP, employment, private consumption, and investment while decreasing budget deficits and public debt, it altered the structure of the economy and created a Dutch disease effect.

Suggested Citation

  • Ragchaasuren Galindev & Nyambaatar Batbayar & Lulit Mitik Beyene & Oyunzul Tserendorj & Unurjargal Davaa, 2020. "Impact on the Mongolian Economy of Foreign Direct Investment in the Coal-Export Sector," Working Papers MPIA 2019-25, PEP-MPIA.
    • Handle: RePEc:lvl:mpiacr:2019-25
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    More about this item

    Keywords

    Mining sector; Dutch disease; CGE model; Mongolian economy;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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