ULAANBAATAR, January 22, 2024 ¨CThere are opportunities for Mongolia to integrate more effectively into global value chains and diversify its economy away from heavy reliance on low-value-added mining exports by addressing constraints to international trade, a World Bank report released today said.
Mongolia has a relatively open trade regime compared to peers, but being landlocked, geographically remote, and vast, the country faces unique challenges to trade development, according to the report, Mongolia Trade Competitiveness Diagnostic. These challenges are compounded by infrastructure and logistics bottlenecks as well as limited ability to meet international product standards.
To create a more conducive environment for the development of tradable sectors, the report suggests implementing more counter-cyclical policies to ensure macroeconomic stability and competitiveness. Reducing effective tariff rates on some intermediate goods could also help promote the productivity and competitiveness of domestic producers. Improving Mongolia¡¯s logistics to reduce delivery costs would expand existing markets for products for which transport costs play a role. Export opportunities in agribusiness could be increased with improved compliance with health and hygiene standards.
¡°Continued improvement and reform to trade policy and administration is critical to further harness Monglia¡¯s trade potential as the platform for economic diversification and sustainable growth," said World Bank Country Manager for Mongolia Taehyun Lee.
Given geographic and logistical constraints, expanding trade in digital services can be a promising way for Mongolia to diversify its export mix, a special focus of the report recommends. Developing information and communications technology infrastructure and establishing programs to better match talent with the demands of the digital sector will be necessary to promote high-value digital services.
Strengthening cross-border cooperation and interconnectedness with the digital economies of partner countries would also help promote digital trade. The government could support digital services export firms in meeting international regulatory requirements that apply to digital exports.
