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Mongolia
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The
Mongols gained fame in the 13th century when under Chinggis
KHAN they established a huge Eurasian empire through conquest.
After his death the empire was divided into several powerful
Mongol states, but these broke apart in the 14th century.
The Mongols eventually retired to their original steppe
homelands and in the late 17th century came under Chinese
rule. Mongolia won its independence in 1921 with Soviet
backing and a Communist regime was installed in 1924.
The modern country of Mongolia, however, represents only
part of the Mongols' historical homeland; more Mongols
live in the Inner Mongolia Autonomous Region in the People's
Republic of China than in Mongolia. Following a peaceful
democratic revolution, the ex-Communist Mongolian People's
Revolutionary Party (MPRP) won elections in 1990 and 1992,
but was defeated by the Democratic Union Coalition (DUC)
in the 1996 parliamentary election. The MPRP won an overwhelming
majority in the 2000 parliamentary election, but the party
lost seats in the 2004 election and shared power with
democratic coalition parties from 2004-2008. The MPRP
regained a solid majority in the 2008 parliamentary elections
but nevertheless formed a coalition government with the
Democratic Party. The prime minister and most cabinet
members are MPRP members.
Economic activity in Mongolia has traditionally been based
on herding and agriculture. Mongolia has extensive mineral
deposits. Copper, coal, gold, molybdenum, fluorspar, uranium,
tin, and tungsten account for a large part of industrial
production and foreign direct investment. Soviet assistance,
at its height one-third of GDP, disappeared almost overnight
in 1990 and 1991 at the time of the dismantlement of the
USSR. The following decade saw Mongolia endure both deep
recession because of political inaction and natural disasters,
as well as economic growth because of reform-embracing,
free-market economics and extensive privatization of the
formerly state-run economy. Severe winters and summer
droughts in 2000-02 resulted in massive livestock die-off
and zero or negative GDP growth. This was compounded by
falling prices for Mongolia's primary sector exports and
widespread opposition to privatization. Growth averaged
nearly 9% per year in 2004-08, largely because of high
copper prices and new gold production. Until late 2008
Mongolia experienced a soaring inflation rate, with year-to-year
inflation reaching nearly 40% - the highest inflation
rate in over a decade. In late 2008 falling commodity
prices in this import-reliant country helped lower inflation,
but by that time, the country had begun to feel the effects
of the global financial crisis. Falling prices for copper
and other mineral exports reduced government revenues
and is forcing cuts in spending. The global credit crisis
has stalled growth in key sectors, especially those that
had been fueled by foreign investment. Mongolia's economy
continues to be heavily influenced by its neighbors. Mongolia
purchases 95% of its petroleum products and a substantial
amount of electric power from Russia, leaving it vulnerable
to price increases. Trade with China represents more than
half of Mongolia's total external trade - China receives
about 70% of Mongolia's exports. Remittances from Mongolians
working abroad both legally and illegally are sizable,
but have fallen due to the economic crisis; money laundering
is a growing concern. Mongolia settled its $11 billion
debt with Russia at the end of 2003 on favorable terms.
Mongolia, which joined the World Trade Organization in
1997, seeks to expand its participation and integration
into Asian regional economic and trade regimes.
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