Mongolia provides an important example to others in East and Central Asia as well as other parts of the region on how to manage an economic transition from a centrally planned to a free market economy within a democratic political framework. The United States values Mongolia’s contribution to stability in a potentially volatile part of the world, its positive example in promoting economic reform and democracy and its visible support for the war on terrorism. Its strategic location between Russia and China, two traditional rivals, nuclear powers and major global players, adds to Mongolia’s significance. However, Mongolia’s harsh climate, small domestic market, land-locked status and lack of infrastructure are formidable challenges. USAID’s programs focus on two of Mongolia’s most pressing concerns: strengthening the economy and improving governance.

Mongolia's Economy Grows, Creating Jobs and New Businesses

Approximately 75 percent of the Mongolian economy is in private hands, up from virtually nothing at the beginning of the 1990s. After several years of stagnation and decline, Giri growth rates reached 3.9 percent in 2002 and 5.6 percent in 2003. This encouraging trend suggests that Mongolia’s hard-won political stability is beginning to have an economic impact.

However, the poverty rate remains high at 33 percent. USAID’s work helps the economy to continue growing and encourages leadership by private firms. USAID is working closely with both sides of the political spectrum to develop bipartisan legislation to reform the tax system and improve Mongolia’s investment climate. The legislation is also designed to increase production and create new jobs. Because the expiration of the Multi-Fiber Agreement will have a deep impact on the textile industry, that is also an area of emphasis. USAID will continue to help the government privatize key state-owned enterprises, including the national cashmere company and an electricity distribution network.

In addition, USAID provides business training to migrants from rural to urban areas and to those living in more remote areas. During the past year, USAID helped create or strengthen over 500 small businesses and helped more than 1,500 people, including almost 800 women, find jobs.

Judicial Reform and More Representative Political Processes Lead to More Effective and Accountable Governance

The judicial system is one major focus of USAID’s work to improve governance in Mongolia. Following the introduction of new civil and criminal codes, USAID launched a series of training programs for every judge in the country. This improved case management, introduced new ideas to continuing legal education and helped reduce corruption in the legal system. All of Mongolia’s courtrooms are now fully automated, and public access to information has increased dramatically. Public terminals in each court make case information available to lawyers, litigants and the public. In addition, because of USAID's assistance in establishing a special investigative unit, more judicial crimes were reported last year than in the previous four years combined. USAID’s partners also produce the popular and effective television show “Legal Hour”, informing the public of their legal rights.

The second focus of USAID's governance work is to make Mongolian political processes more competitive, effective and transparent. USAID's training of poll watchers and of Mongolia's major political parties recently led to dramatically improved proportional representation in parliament. Parliamentary procedures have also been significantly improved with the assistance of U.S. congressional experts.