To a small economy like Mongolia, foreign direct investment (FDI) is a key catalyst in promoting economic growth. Since reaching a peak in 2011, FDI into Mongolia has been declining. This report aims to estimate the impact of FDI on the Mongolian economy, identify the main factors influencing FDI, and how to attract more FDI. In analyzing the impact of FDI on the Mongolian economy, Input-Output table (IOT) of 2010 and 2015 was used. The comparison of the years 2010 and 2015 provides analysis of disparate economic structures. In 2010, FDI trends were upwards whereas in 2015, it was downwards.
The IOT was used to calculate the impact of additional FDI inflow invested into the mining sector on the economy. The main finding was that as more of the additional FDI was absorbed into the domestic market, the higher the investment multiplier.