The mining sector boom in Mongolia: did it cause the Dutch disease?

Abstract

The mining sector has become one of the main pillars in the Mongolian economy. Although the sector is the main driver of better export performance, it may also have a negative effect on traditional tradeable sectors and worsen their competitiveness. The study focuses on whether the Dutch disease symptoms have appeared in the Mongolian economy. A time series model is developed using quarterly data from the period of 2004 to 2012, the so-called mining boom years in Mongolia. Econometric results are derived from the autoregressive distributed lag (ARDL) bounds testing approach and suggest that the Dutch disease symptoms, the spending effect as well as the resource movement effect, have appeared during the researched period in Mongolia.