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 the relationship between the

national mining industry development and the Gross Domestic Product (GDP) for

Mongolia by using the panel data and the VAR model. It analyses the economic environment

of the mining industry in Mongolia as a case to reflect how a government can alter its policy

and institutional framework to cope with recent changes in the industry as well as attract

more mining industries to invest into the 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 the Granger causality test which allows the relationship between

the mining sector and real GDP reveals significant differences among the company. The

result indicates that GDP mining is 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 if the mining industry is sustainable developing,

how Mongolian economy can be better condition