Traditional Mongolian costume. (Photo: Tom Salyer/Stock Connection Worldwide/Newscom)
Mongolia continues to make strides toward economic freedom.
The Economist recently predicted that Mongolia would have the second-fastest-growing economy in the world in 2013. Mongolia has been developing a modern and vibrant economy with a rapidly growing mining sector, which has generated double-digit growth rates for the country in recent years. In continuing dynamic economic expansion and installing broad-based development, it is essential that Mongolia continue to follow the path toward greater economic freedom.
According to The Heritage Foundation’s 2013 Index of Economic Freedom, Mongolia is a “moderately free” economy, with a score of 61.7. While that’s only slightly better than last year, Mongolia’s gains in economic freedom over the 19-year history of the Index have been dramatic: a 13.9 point gain since 1995. No wonder its economy is booming.
This year, Mongolia scores its lowest marks on the rule of law pillar of the Index, which looks into property rights and freedom from corruption. As highlighted by the special section of the 2013 Index, the rule of law is a fundamental aspect of economic growth and development. It influences the attraction of investment capital and provides a level playing field for businesses. As Dr. Edwin Feulner elaborated in his special Index chapter:
The rule of law is a critically important factor in determining which countries attract dynamic flows of global investment capital. Countries with rule-of-law scores in the top quarter have recorded levels of inward foreign direct investment that exceed levels in the lower three quarters combined.… The rule of law, especially for developing countries, may be the area of economic freedom that is most important in laying the foundations for economic growth.
If Mongolia continues to embrace policies to advance economic freedom—especially the rule of law and the fight against corruption—the country’s prospects as an emerging market are sure to be bright.
Drew Ringley is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.