A New Way to Develop Japan-Mongolia Economic Cooperation

Hideo Tamura

Mongolia is in a middle of tourism season now. I heard more than half of foreign touristsare Japanese. Interestingly, your country Mongolia continuously attracts islander Japanese.

Why do we Japanese feel friendly with Mongol?

Maybe because of late Mr. Ryotaro Shiba, one of the most popular historical novelist in Japan. He studied Mongol at his university. I was told that he wrote in an essay many years ago, "I have never met such a greed-less people". If that is still true, Mongolia must be questioned if you could transform yourself into market oriented economy, because as market economy is based on people's desire for goods and money according to conventional economic theory -- this is a joke. Every travel lover Japanese, by the way, thinks visiting at least one time Mongolia with legend of great Genghis Khan.

Let's focus on another important fact. I believe Mongolia and Japan has a common ground. Japan as you know must be defined as a marine nation surrounded by ocean. Ocean provides us with fertile nature and freedom of migration. From our point of view, Mongolia must be defined as the continental ocean country. Brave Mongolian has never taken Gobi Desert and Altai Mountain as barrier. The great steppe like ocean has assured freedom of move. Through the continental sea, you can go to China, Russia, Middle East and Europe. The World Empire by Mongolia of 13th century was built based on the ocean of glass.

Partly because of a sense of affinity, Japan is the biggest donor of official aide to Mongolia, amounting to approximately 12 billion yen (100 million US $).

Government of Japan cuts 10 % of total ODA budget concerning government debt, but excluded Mongolia from the list.

The ODA, however, can not be sustainable if we simply choose a friendly country for us. Although the ODA principle- to cooperate to develop and stabilize the recipient country- is absolutely undeniable, the question is the result and achievement. Without a target, we can not measure the result and efficiency. The efficiency of ODA has recently been interrogated by the public opinion in Japan. Concerning the current double difficulties, dragging on depression and accelerating budget deficit, it is inevitable to have the task of the government checked hard by the public.

An era of tolerance to accept the work of politicians of and bureaucrats without any condition is over in Japan as well.

Now, what possibilities does Japan pursue in terms of economic aide to Mongolia?

The Japanese aide policy has four major pillars;

  1. Arrange economic infrastructure to assist industrial development
  2. Intellectual assistance and upbringing of human talent to promote transition for market economy
  3. Assistance for agriculture and stock farming
  4. Basic life support
Japanese economic aide to Asian countries has been concentrated on construction of so called infrastructure such as roads, electric power, telecommunication, etc. Arrangements of infrastructure have induced massive inflow of foreign direct investment. The well educated, diligent Asian people with high level saving ratio have succeeded to utilize the ODA. As far as the results of Japanese ODA to Mongolia are concerned, infrastructure is the major portion. In this context, current Japanese economic assistance to Mongolia seems to be just the extension of conventional aide policy toward the rest of Asia.

Mongolia, however, would not be easy to reproduce the same pattern with the rest of Asia. The reason must be simple. The size of population surely is too small. The density of population is too thin. Its land scale is four times bigger than Japan and its population is one 40th, 2.4 million only. It is difficult to imagine that your country could be led by labor intensive industry like the rest of Asia.

Concerning rich mineral sources, the competitiveness of your mining industry could be better if the infrastructure network is well accomplished. Still the prices of gold and copper in international markets are too low and too weak to enrich the whole nation by their export.For the time being, it seems to be reasonable that intellectual assistance and agricultural aide should be highlighted.

With regard to Asian financial crises, they have taught us lessons. Construction of projects and projects, one after another, relentless input of massive fund and equipment... We must have learned from the crises that quantity expansion of capacity ignoring market principles will surely hit a limit. That is the bubble economy that is doomed to burst. We are witnessing rapid recovery of stock markets in East Asia. Those young markets of young economies have demonstrated how they are resilient. But we can not be optimistic concerning undergoing huge surplus of production capacity within East Asia. As long as the world market expands rapidly, we could absorb over capacity in a relatively short period of time. The reality, however, tells us that slowing down world economic growth may last longer than we have expected, and that East Asia holds a major disturbing factor within themselves. Therefore I have to stress that we need a new thinking at post Asian crises era.

Mongolia, luckily, has been less wounded by the crises than the rest of East Asia partly because of late coming as a market oriented economy. Your country has to elaborate the grand design for your own future, taking the lessons of Asian crises into account. And we, Japanese as a major donor, have to provide you with unique, viable imaginative idea. Taking the weakness and limit of conventional East Asian economic development model into consideration, we may have to find another model in the globe. For instance, we have a few successful countries, which have small population. Northern Europe such as Sweden, Finland must be the candidate. The characteristics of Nordic countries are admirable; they have built a very peaceful relationship with neighbors, people co-inhabit with the nature and preserve their beautiful land. The most remarkable success is multinational corporations they have produced. They are formidably competitive with MNCs of America, Western Europe and Japan. The Nordic has conquered their fatal handicap of small domestic market through quest of alliance.

The key of their success is co-inhabitation internationally or in other words, global partnership. Their network of partnership has been well diversified from the level of citizen, MNCs to diplomacy. The environmental issues are of course covered by their global strategy. Not intending to criticize the aide policy of Government of Japan, the four pillars to Mongolia, we have to review the basic target and philosophy to activate the aide.

How about such a way of thinking, "Let Mongolia be Asian North Europe" or "Mongolia as the Asian model of global co inhabitation"?

As I mentioned earlier, Mongolian have mastered how to coexist with nature through your tradition of nomadic life. I have heard that Genghis Khan gave strict orders not to cut trees. If forests once are destroyed, they can not be recovered forever. People's life will eventually be revenged by the wounded nature. He obviously recognized well this rule. I happened to know that nomadic life is wisdom to avoid desertization of plains by relocation of cattle in a wide area without fence. Under the hard condition of weather, the nature can not be renewed as desertization of China demonstrates.

So, if we apply this rule to arrangement of infrastructure, construction of high way for instance, we have to pursue the way to harmonize with the environment.

Now, I would like to present a development plan of the ecological tourism. In Mongol you have one of the most transparent freshwater lake in the world and non-polluted air in almost all of the country. The eco-tourism should be established in Mongol, where people and animals have co-inhabited for hundreds thousand years. The nature can not necessarily be preserved if human being is excluded. Watching carefully the grasslands, we find numerous fragments of animal bones. This is the demonstration of co-inhabitancy of people and nature. If you had settled in the grasslands enclosed cattle and competed each other to pile up your asset of cattle, the grass plains would have been barren. Amazingly, even Gobi Desert has some grass places here and there to allow nomadic life. Gobi Desert is alive and different from dead desert such as most part of Arabia and Sahara. Mongol can be proud of the wisdom to integrate human life into natural ecology.

The concept of so called intellectual assistance was invented to apply Russia when old Soviet regime collapsed. It means to instruct socialism economies a way to transform to market economies. The aim itself should be justified. Each country, however, has its own way of reform. There are no effective textbook, and no decisive model to learn from. You may have to originate your own plan suitable to yourself through cooperation with talents from advanced countries.

My suggestion to activate the intellectual assistance is establishment of "Mongol International Intellectual Institute". Assembling specialists from over the world, the institute will intensively work at wide range of agendas for economic development; development of ecological tourism, environmental issues, agriculture and cattle breeding, privatization, accounting, language education, etc. This institute advises Mongol Government and private sectors here as well as international organizations.

Here, I may play up the words of "international" or "internationalized". Concerning the history of Mongolia, you achieved building international metropolis, Genghis Khan's capital Karakorum and Kublai Khan's Beijing composed by experts from China, Central Asia, Middle East and Europe.

Japan should activate intellectual support. Taking part in the Mongolia international institute, if in that case, Japan will contribute a lot in terms of expertise and NGO in the area of science and technology, language education, Japanese language in particular. As more Mongol people learn Japanese, there will surely be beneficial for tourism and other business sectors in Mongolia.

Some people may wish high tech industry such as electronics products. What is real high tech? Assembling semiconductor chips or personal computer is definitely not. Devising, creating, designing of advanced technology must be the real one. You need to provide opportunities; present targets and attract talented people to do it.

In Mongolia, you have possibilities to lead some high tech such asecology related area. The world faces challenge to explore optimum system for co-inhabitancy of people and nature. You may invite new energy development projects such as wind power generating, solar power stations. You can organize an international biotechnology team to invent new farm products for the Frigid Zone including the Cashmere goat.

You may say that Mongolia is still too poor, and that life assistance should be the priority. Yes, if the people's life is endangered, they should be rescued. But, now is the time to change the philosophy of economic aide. The idea of charity is now obsolete in terms of ODA. Wealthy people must help poor people privately.That is ethics or virtue. But the world trend has been changing rapidly. Japan is still believed rich. But the government budget deficit level is the worst among Group seven. Many taxpayers are suffering fear of losing jobs because of restructuring. Most of Japanese may face difficulties when we become retirement age because of low return of pension fund. Young generation is unable to expect better life level than their parents are.

The accountability of ODA will be asked by taxpayers in Japan as well. If you can not explain that this particular ODA project is beneficial or meaningful for the taxpayers of donor country as well as for recipient, it can not be sustainable. In Japan, a word "aide fatigue" has been circulating. Political pressure has been rising to apply yen credit by tied.

Now we are coming to the time to design effective and high performance aide. We have to cast off old style ODA - from quantitative input oriented to quality oriented. I believe we can start a new ODA strategy from Mongolia and Mongolia will give us opportunities.

Thank you.