In our one-year-at-a-time celebration of the 25 year partnership between Mongolia and the World Bank, today we look at 2005. Growth remained a robust 7.3% and industry, which includes mining, continued to produce a larger proportion of Mongolia’s GDP.
East Asia and Pacific
Continuing our series of blogs looking at the 25 year partnership between Mongolia and the World Bank, today we examine 2004, the year Mongolia’s growth rate accelerated to 10.4%. After 15 years, real GDP per capita had finally passed the level of 1989. The country was in the midst of a mining boom, and that sector took center stage in 2004.
Mongolia Mining Sector: Managing the Future assessed the “medium-term growth potential of Mongolia's non-fuel minerals industry, and its potential contribution to economic growth, poverty reduction, and regional development.” The study, based on field work undertaken in 2003, took a broad approach, examining potential constraints and investor perceptions, and then recommended options to improve industry management and the investment climate. Recommendations urged mining companies to support social programs that benefit the surrounding communities, and the government to establish and maintain adequate infrastructure to meet the mining sector’s growth. “The government should address the challenges associated with mining for growth, namely, preventing the development of unsustainable fiscal policy and mounting debt; avoiding rent-seeking behavior, and, overcoming absorptive capacity constraints and adverse impacts on non-mineral exports.”
The world is witnessing the greatest information and communications revolution in human history. Digital technologies provide access to huge amounts of information at all times, allow us to stay in touch with friends and relatives much more easily, and offer new opportunities for business and leisure. The sky is the limit!
The information revolution has reached billions of people around the world, and more people get connected every day. However, many others are not yet sharing in the benefits of modern digital technologies. There are the digital “haves” and digital “have nots”.
Today, 95% of the global population have access to a digital signal, but 5% do not; 73% have mobile phones, but 27% do not; slightly less than half of all people (46%) have internet, but the majority do not; and only 19% of the world’s population has broadband. There also are persistent digital divides across gender, geography, age, and income dimensions within each country.
Why should we care about overcoming this digital divide, and what can we do?
Myanmar’s people are its greatest resource. Its current young population and growing number of productive workers hold the promise of a demographic dividend and inclusive growth. With a steady pace of economic growth, Myanmar has the potential to get rich before it gets old.
For Myanmar to deliver on this potential it can prioritize investing in its people, by strengthening the country's health, education, and social protection systems. Education and health directly improve chances of employment. Individuals who complete more years of schooling earn a higher income. Improving health, education and social protections – closing the gap – is not a mere by-product of economic development, but is essential to shared prosperity.
Myanmar in the early 1960s, poised to be the economic engine of the region, prided itself for having the highest literacy rate in Asia. After decades of underspending and neglect of social services and programs, human development outcomes deteriorated, ranking among the lowest in the region. Rural and poorer households bore a greater burden of ill health, low educational attainment and vulnerability.
In 2009, a major share of the total education and health spending came from households, 63% and 82% respectively. This direct out-of-pocket spending, which was one of the highest in the world, prevented people from seeking care and attending school, because they could not afford it. In the case of health, families were made even poorer, as they had to sell their belongings to pay for the care they needed. And there was no system to protect them.
Even today, social assistance programs only reach 0.1% of the population, compared to 39% among East Asian and the Pacific countries. This is in part due to extremely low level of social assistance spending, which is only 0.02% of GDP, compared to an average of 1.1% of GDP among low-income countries.
As Tunisia embarks on an ambitious reform agenda to strengthen corporate governance and modernize its state-owned enterprises, senior representatives from the Ministry of Finance visited Malaysia in December last year to learn about the country’s best practices on restructuring and managing government-linked companies (GLCs).
These companies, where the Malaysian government has a controlling stake, underwent major transformations since 2004 to turn weak operational and financial performances into high performing entities critical for the country’s future prosperity. The program was successfully executed and has enabled these companies to become profitable, dynamic, performance-oriented, and well-governed institutions.
This visit is one of the first activities of the new World Bank Group Research and Knowledge Hub in Kuala Lumpur, which is helping Malaysia share its successful development experience globally. Here are a few lessons that Tunisia, and other countries, can learn from Malaysia’s experience on reforming government-linked companies.
We are reviewing the 25 year partnership between Mongolia and the World Bank, one year at a time, and today we examine 2003. GDP grew 7.0% that year, the highest growth rate since the transition began. Nevertheless, agricultural production was still well below its historical levels: agriculture’s share of GDP had fallen from 35% in 1998-1999, prior to the dzud, to only 21% in 2003.
After several years of difficult winters, the World Bank program had begun to focus more on rural livelihoods. This shift found further support in the Government of Mongolia’s first full poverty reduction strategy paper (PRSP) which drew on a broad range of quantitative and qualitative data sources to understand the nature of poverty in Mongolia. And that nature was one of vulnerability. The difficult winters, and the migration to the cities they sparked, had heightened attention to environmental problems—the ongoing rewriting of land management institutions raised even more concern. Programs aiming to make livelihoods sustainable needed to be matched with programs to make land use sustainable.
After back-to-back dzud’s (winter disasters), and to address the increasingly visible problem of rural poverty, the Sustainable Livelihoods Project (SLP) was approved in 2002. The rationale drew on a joint Government-donor evaluation of National Poverty Alleviation Program (NPAP) which concluded that “NPAP had provided valuable support to local governments for the rehabilitation of social and economic infrastructure, but the direct income-generation support to poor households was much smaller than ought to have been realized, and benefited perhaps not more than 20% of poor households. Achievements in reducing rural poverty were particularly limited.” With livelihoods on the steppe so fragile, what could be done?
In June of 2001, the Government of Mongolia produced its Interim Poverty Reduction Strategy Paper (I-PRSP), outlining the challenges faced by the dzud, by the fall in commodity prices and trade as a result of the Asian financial crisis, and by the transition from socialism. The I-PRSP outlined the “main priority policy issues of the government: reduction of unemployment, public sector management, improvement of access and delivery of basic services, and increase of living standards of the population.” An assessment by the staff of IDA and the IMF lauded the I-PRSP’s strong analysis of government policies, designed to ensure macroeconomic stability; solid assessment of poverty; early involvement of civil society and other major stakeholders in the preparation process; and a satisfactory agenda for stakeholder analysis.
Young people account for almost half of Papua New Guinea’s population and comprise a large part of the urban poor. In the capital, Port Moresby, an increasing number of young people are leaving school without the necessary skills for entry-level jobs.
The Urban Youth Employment Project (UYEP) provides disadvantaged young people (aged between 16 and 35) in Port Moresby with life skills and employment training to increase their chances of finding long-term employment, also the motivation to make a fresh start in life. To help meet immediate economic needs, the project is also providing temporary employment opportunities.
The suffering in rural areas was clear, and the loss of animals meant a loss of future livelihoods, as well. As part of its relief plan, the Mongolian Government requested to reallocate the remaining proceeds of the World Bank’s Poverty Alleviation for Vulnerable Groups Project for dzud disaster relief. Over $1.3 million went to assist poor herders affected by the dzud to help them restock and maintain their livelihoods. About a third of all eligible herder households received support from the restocking project. In subsequent years, the World Bank program in Mongolia would shift to address squarely the challenges facing herders.