The peril and promise of resource nationalism: A case analysis of Mongolia's mining development

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 phenomenon has been exposed mainly through the ever increasing role of state ownership in major mineral deposits, mostly by direct equity participation. The rationale behind these nationalist policies is to maximize the economic and political benefits from extractive industries. However, in reality, the Mongolian government lacks financial and human resources as well as practical knowledge to engage directly in mega projects which pose substantial risks, if carried out improperly. The aim of this paper is to examine the underlying nature of the state-centric resource development model in Mongolia. Using an institutionalist approach, the study provides a systematic understanding of the root causes for the growing state involvements in mineral resource development, and its implications for and implementation upon the Mongolian mining sector, including major challenges encountered as a result of the dominant ownership structures shaping the industry.