From natural resource boom to sustainable economic growth: Lessons from Mongolia

Bin Grace Li, Pranav Gupta and Jiangyan Yu

International Economics, 2017, vol. 151, issue C, 7-25

Abstract: Many resource-rich developing countries are in the process of harnessing immense mining resources towards inclusive growth and prosperity. The often-large infrastructure gap in developing countries calls for public investment to unlock the long-term growth potential. This paper utilizes a structural model-based approach to analyze the macroeconomic impacts of different public investment strategies on key fiscal and growth variables. We apply the model to one of the resource-rich developing countries -- Mongolia. We find that, although scaling up public investment could provide a boost to growth, too rapid fiscal outlays will push the economy to its limit of absorptive capacity and increase macroeconomic vulnerabilities. Prudent fiscal policy, particularly moderating infrastructure investment and optimizing investment efficiency, is essential to maintain economic stability, as well as to boost the long-term sustainable growth for developing countries like Mongolia.

Keywords: Natural resources management; Debt sustainability; Public investment (search for similar items in EconPapers)
JEL-codes: E62 F34 Q32 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Journal Article: From natural resource boom to sustainable economic growth: Lessons from Mongolia (2017)
Working Paper: From Natural Resource Boom to Sustainable Economic Growth: Lessons for Mongolia (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:151:y:2017:i:c:p:7-25

DOI: 10.1016/j.inteco.2017.03.001

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