The collapse of the former Soviet Union marked the beginning of a transition
era for the Mongolian economy. Changes in trading patterns and economic assistance
along with movement from a command economy towards a market system brought a
period of restructuring and adjustment. Mongolia’s development during the 1990s
concentrated on mining activities, animal husbandry, and the service sector with a sharp
contraction of other sectors and a virtual collapse of manufacturing production. This
has had extremely serious implications for employment creation, income generation,
and human resources. Despite a highly educated population, unemployment and
underemployment are rampant. There has been a rapid rise in poverty. New employment
opportunities are largely limited to livestock herding and the informal sector.
This study is a follow-up to earlier research on the informal sector in Mongolia
and draws on the experience and expertise of the ILO in conducting research and
identifying policies for the informal sector. Several methodologies for statistical
measurement were beyond the scope of this project. It was nevertheless thought that
examining informal sector characteristics, challenges, and opportunities would lead to
useful suggestions for further investigation and policy initiatives. The study includes
four sources of information: secondary research, key informants, case studies, and
focus groups.