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The Wolf Economy

Mongolia is a vast country, home to few people and a booming economy. The banker Ganhuyag

Chuluun Hutagt explains how this relates to each other.

Brand eins: Mr. Hutagt, you live in the least densely populated country on Earth. Mongolia is almost five

times as large as Germany, but home to only as many people as Berlin. Do you sometimes feel lonely?

Gan: In my everydays life I rarely feel this way. I live and work in the capital Ulaanbaatar, like about half

of the Mongolians. Therefore, I can assure you: Our monster traffic jams are not different from those in

other Asian metropolis. Yet, clearly, the vast country is part of all Mongolians attitude towards life. This

is part of our cultural nomadic heritage. My office is in the city center, but no matter in which direction I

go: After ten kilometers, there is only vast plains, landscape and animals. There, the nothing and the

silence start. If you want, you can drive off-roads as you wish. The land is owned by nobody.

Really by nobody? Not even owned by the state?

True. Formally, it is owned by the state, but that is actually irrelevant. We have enough space. Each

citizen of Mongolia has the right to own land. Following the collapse of communism the state has

transferred a lot of land to citizens.

What are the people using it for? Agriculture is considering the extreme climatic characteristics almost

not feasible. Moreover, the nomadic animal husbandry consists of hard work and privations.

Firstly, the ratio of people still living a nomadic or semi-nomadic lifestyle is decreasing continuously.

Currently, we experience an extreme urbanization and the traffic jams in UB are a visible sign of that.

That leads to even more free, unused space in the countryside. The government elaborates a strategy to

strengthen the regions and to slow down the flight from the countryside.

Dont you need more people for such a vast country?

That was the traditional answer of the class in power. During communist times, women with lots of

children were awarded. In the last 30 years, the population has indeed doubled. There are still many

incentives to have children. During the last couple of years, the government has paid a bonus for each

newborn to the parents. Or the government will directly pay cash. This led to a baby boom in 2007, 2008

and 2009. Today, we are a very young country, and that is also a big opportunity. Meanwhile, we

experience a decrease of population growth in urban areas, and in my opinion, this is good. Women

with too many children cannot work and assist the development of the country.

I do not believe the theory that population growth is the most important factor for economic growth.

Yes, Mongolia is a huge country, but that doesnt mean that we need to populate every square km in it.

The economically relevant factor is not the size of the land, but what is hidden underneath.

You mean raw materials/resources?

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Mongolia is one of the countries with the largest resource endowments on Earth. This wealth opens a

tremendous chance. During the last 10 years, we experienced an annual growth of 5-10%. Our income

from the mines allows us to invest intelligently into growth and infrastructure and to leap ahead in our

development. In the area of communication, we have achieved this already. We have 3 million people

and 2.5 million mobile phones.

This unique mixture of wealth in area, natural resources and young, ambitious population gives us the

opportunity to create a new economy. I call this economy the wolf economy.

Can you please explain this.

There are Tiger-States, Chinas economy is a dragon, the Russian one a bear. According to Mongolian

myths, our people have a gazelle as a mother and a wolf as a father. Ten wolves can kill 1000 sheep. Few

Mongolians have once created the largest Empire in Eurasia in the history, and reigned over people with

a lot more population. Ten percent growth makes us one of the fastest growing economies of Asia. In

five to ten years we will have growth rates of 20% if we invest our natural wealth intelligently into

education and the health care system.

We have the resources to do so. We have to work hard to allow entrepreneurs to be successful. I do not

refer to subsidies; there have been more than enough in the past. I refer to positive framework. Already,

we are one of the countries with the lowest income and corporate tax rates in the world. The income tax

is for nobody higher than 10%. By the way, this is also recognized by more and more Europeans. In our

Bank, there is a young German colleague, a business graduate from Frankfurt. He came as a tourist to

the country and started falling in love with it. Plus, he has understood: I can become affluent when I am

35. So he stayed.

This sounds like Mongolia is the new land of endless opportunities.

Well, at least it is ONE land of endless opportunities. This is actually a remake of the American myth. Our

vast space creates endless chances. Tourism for example: More and more people look for silence. The

possibility to listen to oneself and to reflect. I can assure you: There are few places on Earth where this is

more likely than in Mongolia. We have started to name huge protected areas and will consequently

follow this way. A land of endless opportunities needs a strong, highly educated middle class. This

middle class is just in the making. And she is free. Besides Japan and India, we are the only real

parliamentarian democracy in Asia.

The Wolf has a vision.

What does the wolf see?

We can become as affluent as Saudi-Arabia while meanwhile build a free and fair society, not only rich in

a financial sense. The wolf sees that natural resources provide us a strong boost. And he sees that we

have the historical chance to diversify our economy. We can become a regional center for banking. We

can build up excellent clinics and attract the best doctors of the region and with these the affluent

patients from China and India, who want to recover in our fresh air and silence. We can start the

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creative motor. We have the resources to build up the best universities of the region and to hire the

best professors all over the world to educate our many young talents. An excellent management

education is also part of this. Two thirds of the population is below 30 years old. The life expectancy has

already risen to 70 years. The wolf knows these numbers. The political leadership needs to internalize

this vision. Investors are already ready.

I have read that a major part of goods are still transported by camels in the country.

A major part is a little misleading. Camels are still used in the countryside. Nomadic families transport

their yurts (Gers) using them, but a major part of goods is transported by trucks. Yet, it is true that in

many regions we do not have paved roads. Trucks just drive across the steppe. Infrastructure is a huge

challenge for us. We increase the budgets for streets, railroads and airports annually, but in such a large

country with so few inhabitants it is of cause difficult to finance a perfect network of roads.

Are there plans to populate more land?

No, at least no concrete plans. We are also careful when it comes to immigration. The Mongoliancitizenship cannot be acquired, only a permit to live. Otherwise, people would queue up because the

citizenship is connected to a lot of privileges, i.e. the right to own land. All citizens are also automatically

owners of some governmental mines.

But who knows what will change in the future. IF Japan and Singapore need land, because of a rising sea

level, all people need to rethink. Maybe we can sell or rent land. The weather in the Mongolian high

plateau is extreme. But at least the feet remain dry