Coal is one of Mongolia’s main export commodities and more than half of the coal is exported to China by road. However, this causes several problems: it is too expensive when international prices are low, the road system creates a bottleneck when prices are high, and it creates a lot of pollution. The government plans to use foreign direct investment (FDI) to build a railway transporting coal to the Mongolia-China border. A team of local researchers examined the impact of FDI in the exported coal and railway sectors on the Mongolian economy. Their findings indicate that while this would be positive for GDP and employment, FDI in the exported coal sector would also bring Dutch disease effects, deepening Mongolia’s dependency on the mining sector. Find out more about the research methods, findings and policy recommendations in the following PEP publications:
