The document review presented in this report proposes that employment
strategies for rural Mongolia be based on local development at the soum level to address
the problems of both livestock herders and settled communities. The report includes
an historic context for current issues and points to integrated approaches identified
by soum governments, together with community stakeholders, for local development
and employment generation.
Over the past century Mongolia has passed from Chinese domination to the
control of nationalist revolutionary groups following a Soviet model of economic
development. The administration organized campaigns to ensure production levels
and efficient management of herding and farming. Restructuring and privatization of
the Mongolian economy resulted in the collapse of livestock collectives and state
farms. Market reforms including privatization of ownership, deregulation of prices
and liberalization of trade did not increase productivity and profitability in agriculture
or open new opportunities for off-farm employment. Productive inputs, agricultural
processing, support functions, financial services and marketing channels previously
had been under state control. After the collapse of livestock collectives and state farms,
the private sector did not step in to fill the gap. Changes in international trade affected
large state-owned enterprises that had engaged in agricultural processing for export
markets. Factories for spinning, knitting, leather and shoes were closed. As a result,
most of the wool, hides and skins and about half of the cashmere were exported
without processing. Despite barriers confronting the development of enterprises, a
number of businesses have been successful in processing agricultural products.