National competitiveness will open Mongolia’s door to the world

Mongolia lacks competitiveness, which is considered the
driving-force of market economy. A group of young professionals who have
obtained degrees in economic fields from universities in developed
countries have established Economic Policy and Competitiveness Research
Center. We interviewed Mr.Otgochuluu Ch, general director of the center.

Why did you establish the Competitiveness research center?

During the cold war era, countries competed on the basis of political
ideology. Now, most countries have central political ideology and
competitiveness is a new field of science defined as international trade
capacity, security and reliability of the workplace, public sector
support, and favorable environment for foreign and domestic investors.

How is our competiveness today?

There are one to two-page competitiveness research reports done by
the World Bank and the World Economic Forum. Currently Mongolia is at
No.56 according to the World Bank ranking. They do their research based
on our legal and judicial system. However, they do not consider the
fact that law implementation is slow, albeit good laws and regulations
which leads to unrealistic conclusions. On the other hand, according to
World Economic Forum Mongolia is ranked at No 99 down from No 123.
However, the research is survey-based, which makes it more subjective.
Therefore, we are collaborating with a Swiss based research institution
in order to carry out a research according to their scientifically
accepted, more realistic methodology. This institution does country
research reports on 60 developed countries. Our mission is to do a
complete, realistic research report on competitiveness. We will be
included in the upcoming 60 country reports.

How different is it from previous research?

We will conduct an locally-based realistic research. Previous
research reports were done by international institutions free of charge,
but we are paying a moderately high price for a Swiss institution to
conduct the research, which would be the first such instance in
Mongolia. We will learn new research methodologies by collaborating with
this international institute. In the past, we were only interested in
the results. However, this time, it will be equally important for us to
know why we get such results.

So do you have the expertise and economic credentials to accomplish this mission?

I hold a masters degree in monetary and foreign exchange policy and I
previously worked at a market research section of a commercial bank. As
such, I have experience on macroeconomic policy research. Everyone in
our team is a recent university graduate who came back to Mongolia after
studying in developed countries with good grades.Developed countries
are attracting “brains” of developing countries to their economy.

What other similar work experience does your team have?

I am attached to the government approved initiative “Beehive” program
implementation commission since its inception. This program started
getting implemented after several meetings with GTZ and International
Relocation center staff.

How come a man with good grades from a German university did not choose to stay there?

This is where the “Beehive Initiative” came from. There is a scholarship program in Germany for successful university graduates.

What is that?

They give university graduates his/her return ticket fare, grant of
10 thousand euro to the employer plus the salary difference to the
student.

Is the financing for the program decided?

In general it is approved, but there are some financial problems. My
first thought was to create certain quotations on special government
funds and to spend it on returning Mongolians. There is a fund with
motto “Supporting development through human capital” which has a 3-4
billion euro budget. Now, Mongolians are also included in this funding
program. Mongolia has 200k euro line.

Is this related to competitiveness?

It has a very important role. By having highly educated experts back
in Mongolia, our country’s competitiveness would increase. We must have
world class educated and skilled expertise.

How is the local expertise today?

One example is that foreign mining companies are hiring legal teams
offering them high salary. However, our government does not have that
amount of money. This leaves us disadvantaged when drafting agreements.
If we had our own expertise, then there would not be any disadvantaged
agreements. The mining and banking sectors are expanding. However, we
lack local expertise to work with these investors. In addition, we are
having a policy on attracting skilled foreign expertise from developed
countries.

Are there any other countries that have implemented similar programs to “Beehive”?

Kazakhstan has started implementing a program called “Bolashak”
(Future) a few years ago. As a result, they have sent many students to
developed countries to study. I’ve met with key officials of some
ministries in Kazakhstan. They are young people under 30 and all of them
have obtained higher education in developed countries. These young
people have become a bridge among their nation to the rest of the world.
Now, Kazakhstan is sending many young people to Beijing and also to
western countries to study diplomacy and engineering as a result of the
“Bolashak” program.

How are they financed?

From the government. Under non-repayment policy.

And the conditions are..?

They must come back. They must become good specialists. The biggest
advantage is that the government provides them with a workplace. Chile, a
country similar to our country, has implemented a project in
collaboration with World Bank in 1970. They made it known to the world
that Chile can develop as a mining economy. Chile does not include its
mining revenues to its state budget still today. They established a
foundation to send young people abroad on the interest earned from the
foundation. They even invest in their masters and doctors program.

Don’t they spend their revenue from mining sector on other sectors?

They do. They spend a lot on helping other sectors development.
Mining revenues are not never-ending. By the time, mining revenues are
depleted other sectors will be on their feet. Our country also has to
diversify our economy to make it less dependent largely on mining
sector. In the past, revenues from Erdenet had significant influence on
the state budget. Today, when the OT project is implemented we will be
more dependent on mining.

What’s wrong with that?

Small to medium enterprises would have limited opportunities.
Opportunities of other sectors to the overall economy would shrink.
Highly skilled people have already started working at mining companies
with high salaries. Banking and financial sectors would also expand.
Here, they would lack human resources. It is called brain drain. Our
educated people are relocating abroad a lot. So the “Beehive” program
will contribute to limiting this outbound migration.

What leverage does the “Beehive” program have in order to attract young people?

The first step is to provide them with information. There are also
articles on creating a database on Mongolians living abroad and
informing local organizations about them, creating a better legal
environment for those intending to work in their homeland, financially
supporting them on implementing or initiating projects and programs in
the areas of leading sectors, and perhaps paying for their return fees.

Is this on its implementation phase now?

It is approved in general. But it is still under discussion regarding supporting whom, when, where and how.

What would change when competitiveness improves?

China has become the second biggest economy in the world today. They
can attract foreign investment. Improved competitiveness would increase
its economic capability. Sales of our goods and services would increase.
We would produce value-added goods. As a result, number of workplaces
would increase. If companies gain better competitiveness capabilities
then more high paying workplaces would be created. There will be more
secure and quality workplaces.

How good is the competitiveness of companies now?

Only a few mining companies are competing on a global scope today. If
we use our abilities to compete on our meat processing, milk and
cashmere production, then quality workplace would be secured. Income
would improve and buying power would be enhanced.

What is necessary to create such competitiveness?

If we have a strong legal and judicial system, investors would come
holding their money. Mid social class will be created. This would uphold
political stability. In Germany and Japan, 70-80% of production comes
from small scale producers. However, here only a few companies are
dominating and creating most of the goods and services. In countries
with strong competitiveness, 70-80% of workforce is working in small to
medium enterprises. This indicator is around 30% in Mongolia by
comparison. One of our purposes is to create mid class by studying
experiences of other developed conutries and identifying where we are
among other countries.

What is the center doing now?

Economic Competitiveness Forum will be held in March. We are working on to prepare a report prior to that.