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Challenges, Policy Options, and the Way Forward

Economic Diversification in Selected Asian Landlocked Developing Countries (Bhutan, Kazakhstan, Mongolia, and Turkmenistan)

image of Challenges, Policy Options, and the Way Forward

The study examines the trade and development challenges facing Asian Landlocked Developing Countries and their prospects for export diversification. It offers recommendations based on the case studies of the selected countries. The report argues that, despite complex trade and development challenges, the countries studied have significant potential to diversify their economies into the production and export of higher-value-added products in several sectors. These include agriculture (including agro-processing), light manufacturing (such as textiles, leather, and leather products), information and communications technology, tourism, and the construction sectors. Using the product-space approach, the report also identifies specific products that hold potential for export expansion and diversification in each country. For instance, agriculture and, to a lesser extent, manufacturing, are promising sectors for diversification, including niche products such as mandarin oranges (Bhutan), cashmere (Mongolia), silk (Turkmenistan), and cereal (Kazakhstan). The rich cultural heritage and varied geography of these countries are also conducive to tourism. In addition, there can be synergies between tourism and improvements in the quality of some local food and manufacturing products. However, a number of improvements in micro- and macro-economic policies and institutions are necessary to realize this potential.

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Mongolia

Mongolia is a large, sparsely populated country that lies between China and the Russian Federation, with vast deserts covering a large part of its land mass (the Gobi Desert to the south and extending into northern China). The country is endowed with substantial mineral resources such as copper, coal, gold, uranium, and other rare metals, and as such, it is one of the lowest-cost mineral producers in the world. In particular, it has among the largest copper and gold mines and coal deposits. However, most of the reserves remain unexploited and unexplored. The government’s demand for a large share of the resource rents has been deterring major mining companies (although recently there has been some progress). Overall, proven reserves are valued at around US$1 trillion, and much of the country is yet to be prospected (IMF 2017).

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