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International Relations Government Elections Foreign policy Economy

Mongolia: Between a Rock and a Hard Place

Ulan Bator - Bejing
Ulan Bator - Bejing. Photo: Dave Gray/flickr.

Given Mongolia’s potential to become a future commodity powerhouse, it does not seem strange that recent legislation that aims to cap foreign investment and ownership was a cause for concern among the domestic and global business community. The Strategic Foreign Investment Law  aims to confront two major challenges to Mongolia’s social and economic development. Firstly, the regime has to respond to domestic demands that resource wealth is used to benefit the wider population.  Moreover, Mongolia also seeks to reduce its dependence on its two powerful neighbors and in particular to limit Chinese influence over its economy. Neither of these dilemmas will be easily resolved.

After intense domestic lobbying, the Mongolian Parliament approved a watered-down version of the Strategic Foreign Investment Law on 17 May. Initially, the law stipulated that foreign investors seeking to buy a stake of more than 49% in Mongolian companies required the approval of Mongolia’s Foreign Investment and Foreign Trade Agency (Fifta) and Parliament.  However, following amendments aimed at appeasing foreign investors, the conditions only apply to companies involved in Mongolia’s ‘strategically important’ mining, financial, and media and telecommunications sectors and when deals are valued at above $76 million. Yet deals in which the buyer company is even partially in state ownership will require approval regardless of the sector of the business.

Categories
Development

Development Aid: Missing Its Mark?

More targeted development aid is needed, photo: Melissa Gray, flickr

Has traditional development aid helped alleviate – or further exacerbated – poverty? This week the ISN takes a closer look at the promises and pitfalls of development aid with particular attention to the benefits of targeting it more directly at the grassroots level.

This ISN Special Report contains the following content:

  • An Analysis by Dr Gerard DeGroot discusses the limited ability of traditional development aid to alleviate poverty, concluding that small projects addressing basic human needs may have the biggest impact.
  • A Podcast interview with Fiona Ramsey about the big benefits of small microfinance loans for sustainable development.
  • Security Watch articles about the impact of development aid from Haiti to Georgia, Somalia and beyond.
  • Publications housed in our Digital Library, including a recent Kiel Institute Working Paper assessing the value of performance-based aid as an alternative to the largely failed traditional approach.
  • Links to relevant websites, such as the International Policy Network’s paper on the impact of foreign aid – with Tanzania, Kenya, Uganda, and Botswana cited as examples.
  • Our IR Directory, featuring the Cambridge-based Collaborative for Development Action, an NGO committed to improving the effectiveness of international actors involved in supporting sustainable development.