Figure 1.--This is a scene at a Mongolian state farm in 1966. Many of these farms were located close to cities or major economic centers. The press caption read, "Batsumbar State Farm, north of Mongolian capital of Ulan Batar has several women nassigned to caring for comminty's children while their mothers and fathers workon the farm. Children are warmly dressed and well fed."

Most in the West have given little thought to Mongolia and the Mongolian economy. In fact Mongolia in connection with China has played a pivotal role in world history and economics. When China was strong and united it pressured the Mongols and other steppe people to move west. This was the source of pressure on Europeans. It was attacks by Steppe people that drove the Germanic peoples west into the Roman Empire (4th-6th centuries AD). And some Steppe people actually reached Europe, including the Avars and Huns (5th century AD). The most famous of course were the Mongols themselves led by Genghis Kahn. In this case the Mongols had conquered China anf then turned west. Mongolia from time immemorial has had an economy based on grazing livestock on the vast Asian steppe. Mongolia's rise to empire was based on the fact that the Steppe was crossed by the fabeled Silk Road between China and Europe--a huge source of wealth. The advent of maitime commerce between Asia and Europe undermined the Silk Road--the principal source of wealth for the Mongol Empire. Mongolia never adopted a culture that pursued knowledge and technology and thus as these cultural elements became increasingly important, Mongolia receeeded to the backwaters of world history and its opeople descended into poverty, becoming one of the poorest countries in the world. In the 20th century, the country's geographic position forced it into the Communist system and poverty-entrenching destructive socialist economics. The country had been traditionally associated with China, but after the Russian Revolution (1917), the Soviet Union became the dominant influence. Socialist economic policies forced on Mongolia did little to modernize the country, although the Soviets and Eastern Euopean satellites, especially Hungary, did provide some aid. Russia abruptly stopped its aid after the disintegration of the Soviet Union (1992). This actually proved to be a benefit for the country because it forced the adoption of free market reforms. For the next decade, Mongolia suffered a deep recession, following which it has made substantial progress with major economic reforms, centered around the adoption of free-market economic structure and privatization of the formerly highly inefficent state-run economy. As in the Soviet Union, state enterprises produced good and services that were worth less than the raw material inputs used to produce them.

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Created: 1:20 PM 12/26/2020
Last updated: 1:21 PM 12/26/2020