Finished Studies

FDI Inflow in Mongolia: Comparative Analysis of Investment Environment and Terms of Trade

Authors: Z.Manlaibaatar, B.Munkh-Ireedui, B.Delgermaa, T.Dulguun

Source: Economic Research Institute

Language: English

Keywords: terms of trade, foreign direct investment, mining, natural resources, Mongolia, Chile

Date: 2022-04-07

As mineral commodity demand increased from China, the prices of commodities surged, leading to an influx of foreign direct investment (FDI) inflows into Mongolia. Elevated mineral commodity prices coupled with the International Monetary Fund’s Extended Fund Facility program increased Mongolia’s attractiveness as an investment destination. However, despite the upgrade in sovereign ratings and rankings within investment indices such as Doing Business and Corruption Perception, foreign investors remained hesitant to invest in Mongolia due to persisting risks and issues.

The aim of the study is to determine the steps required to be taken by the government to create and nurture and business-friendly environment as well as put into place a more transparent, inclusive and effective rule-making process for drafting and implementing commercial legislation. Therefore, the investment climates of both Mongolia and Chile were compared. Chile is similar to Mongolia in that both are resource-rich and have to overcome political instability and corruption. On the other hand, Chile is considered an attractive destination in Latin America for investors.

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