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

Ragchaasuren Galindev, Nyambaatar Batbayar, Lulit Mitik Beyene, Oyunzul Tserendorj and Unurjargal Davaa

Working Papers MPIA from PEP-MPIA

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.

Keywords: Mining sector; Dutch disease; CGE model; Mongolian economy (search for similar items in EconPapers)
JEL-codes: D58 Q33 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cmp and nep-int
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Handle: RePEc:lvl:mpiacr:2019-25