Promoting economic growth and innovation to create jobs
Title: Promotion of Growth and Employment in the Private Sector (PROGRES)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Lead executing agency: National Development Agency (NDA)
Overall term: 2021 to 2023
Mongolia’s economy is marked by wild fluctuations and inconsistent policies. The country has experienced significant economic swings over the last few decades. Fluctuating commodity prices on the world market exacerbate this instability. The Mongolian economy remains highly dependent on raw materials, which account for the bulk of its exports. As a result, the country’s economy is not sufficiently diversified. This is compounded by the high national debt and inadequately developed financial administration system.
The government is focusing on reforms to establish a broader economic base, extend agricultural value chains and promote tourism, light industry and the energy sector. Small and medium-sized enterprises (SMEs) in particular offer great potential to achieve productivity gains and product innovations. They already generate half of the country’s GDP (gross domestic product) and provide about 80 per cent of jobs. They will, however, require considerable support in the coming years to realise this potential. If SMEs are to grow and employ more people their production methods will need to be modernised, products and services upgraded, and new markets tapped. New jobs of this sort created by SMEs will enable people, primarily outside metropolitan areas, to increase their household income and to gain access to education and social networks.
The project supports the National Development Agency (NDA) in its efforts to improve economic development by establishing an investment-friendly business environment. It aims to promote the long-term economic growth of SMEs, introduce competitive and innovative production and business processes, and thereby create jobs, especially in semi-urban regions.
Partner institutions are better able to promote inclusive, long-term growth, also for smaller companies and start-ups. Mongolian SMEs are modernising and becoming more efficient, offering better products and services, accessing new markets and employing more people.
The project operates nationally and in two focus regions. In cooperation with the NDA and other implementation partners, it strives to improve the economic framework, harmonise local and national development strategies, establish a positive environment for investment, and reduce entry barriers for young entrepreneurs and international investors.
Project activities centre on the competitiveness and productivity of SMEs. Regional business hubs help companies modernise their products and services and boost innovativeness. Digitalisation and knowledge transfer help them address with new markets and customer groups. The regional business hubs provide companies with access to material and intangible resources such as technical knowledge and skills, networks, environmentally friendly energy and logistics infrastructures and affordable financing. This facilitates business modernisation.
The business hubs serve as central innovation drivers in the regions. It will therefore be crucial for the success and sustainability of the measures to establish the business hubs in close cooperation with the local partners, to prepare a portfolio of services that are attractive for companies and to develop a sustainable operating concept. After the end of the project, the jointly established business hubs will be handed over to the partners, which will run them independently.
Direct target groups include potential business founders and SMEs in Ulan Bator and two selected semi-urban regions of Mongolia. Business associations and research institutions can support innovations while domestic and foreign investors offer themselves as financing and knowledge transfer partners for SMEs.
Last update: February 2021