The relationship between mining development and growth of GDP

Abstract

Resource nationalism is often cited as the most serious risk to foreign mining investment in developing countries. Mongolia provides an important case study of studying this phenomenon and its impacts, especially during the global mining boom years from the late 1990s to 2010. This project researches relationship between the national mining industry development and the Gross Domestic Product (GDP) for Mongolia by using the panel data and VAR model. It analyses the economy environment of mining industry in Mongolia as a case to reflect how a government can alter their policy and institutional framework to cope with recent changes in the industry as well as attract more mining industry to invest into Mongolian economy while protecting and persuading a sustainable economic development. The data are GDP, GDP mining, employment rate, company’s market value and total asset measured year from 2011 to 2018 taken by quarterly. The result indicates that GDP mining is likely to affect economic growth.

Empirical results using Granger causality test which allows the relationship between mining sector and real GDP reveals significant differences in among the company. The result indicates that GDP mining are likely to affect economic growth. Panel data analysis indicates that causality runs from GDP mining to GDP, in support of the conservation hypothesis. This again indicates that conservation efforts may affect economic growth. For development economy in Mongolia, how mining industry reflects and affects to Mongolian economy. And we prove about if the mining industry is sustainable developing, how Mongolian economy can be better condition