mongolia governance keynote speech by daniel kaufmann

8/18/2019 Mongolia Governance Keynote Speech by Daniel Kaufmann

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Reality in the commodity markets:Oppor tun i ty for good governance reforms?

Daniel Kaufmann, President & CEO

Natural Resource Governance Institute (NRGI)

www.resourcegovernance.org

Keynote speech at the Mongolia Economic

Forum Ulaanbaatar, Mongolia, 31 March 2016

http://www.resourcegovernance.org/http://www.resourcegovernance.org/


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Эрдсийн бүтээгдэхүүний шинэ захзээл: Сайн засаглалд чиглэсэн

шинэчлэл хийх боломж уу?

Даниэл Кауфман, Ерөнхийлөгч бөгөөд Гүйцэтгэхзахирал

Байгалийн баялгийн засаглалын хүрээлэн (ББЗХ)www.resourcegovernance.org

Монголын Эдийн Засгийн Форумын илтгэл – Улаанбаатар, Монгол Улс

2016 оны 3 сарын 31-ний өдөр

http://www.resourcegovernance.org/http://www.resourcegovernance.org/


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The Governance Challenge: Outline in brief

• Economics : crucial, but not alone: integrating intogovernance – political, economic & institutional

• What is Governance ; how measured; does it

matter?

• Evidence from the world & Mongolia: Mixedperformance specific strengths & vulnerabilities

• Governance in Extractives: a framework for

assessment & main challenges & findings• Lessons from global evidence & experience and

some implications for Mongolia: Governance

Reform Opportunity Now3


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5

WGI: Six Dimensions of Governance

• The process by which those in authority are selected andreplaced

– VOICE AND ACCOUNTABILITY

– POLITICAL STABILITY & ABSENCE OF

VIOLENCE/TERRORISM• The capacity of government to formulate and implement

policies

– GOVERNMENT EFFECTIVENESS

– REGULATORY QUALITY• The respect of citizens and state for institutions that

govern interactions among them

– RULE OF LAW

– CONTROL OF CORRUPTION

Governance as the set of traditions and institutions by which

authority in a country is exercised-- specifically:


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WGI Rule of Law, 2014

7

Source: Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, The Worldwide Governance Indicators: Methodology and Analytical Issues (September 2010). World Bank Policy Research

Working Paper No. 5430. Available at SSRN: http://ssrn.com/abstract=1682130

http://ssrn.com/abstract=1682130http://ssrn.com/abstract=1682130


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WGI Control of Corruption: the Americas, 2014

9Source: Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, The Worldwide Governance Indicators: Methodology and Analytical Issues (September 2010). World Bank Policy Research




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Voice and Accountability Performance WGI: Asia

Source: Worldwide Governance Indicators (http://www.govindicators.org), additional information at Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, TheWorldwide Governance Indicators: Methodology and Analytical Issues (September 2010). World Bank Policy Research Working Paper No. 5430

(http://ssrn.com/abstract=1682130).

11

http://www.govindicators.org/http://ssrn.com/abstract=1682130http://ssrn.com/abstract=1682130http://www.govindicators.org/


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Political Stability & Absence of Violence Indicator: Asia



13



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Government Effectiveness Indicator WGI: Asia



15



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Control of Corruption WGI: Asia 2014



17



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Mongolia Governance Indicators: WGI 2000, 2007, 2014



19



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Ukraine Governance Indicators



21

G f C



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Worldwide Governance Indicators for Chile:

2000, 2007, 2014

Source: Kaufmann, Daniel, Kraay, Aart and Mastruzzi, Massimo, The Worldwide Governance Indicators: Methodology and Analytical Issues (September 2010). World Bank Policy Research




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-30%

-20%

-10%

0%

10%

20%

30%40%

1

9 9 7

1

9 9 9

2

0 0 1

2

0 0 3

2

0 0 5

2

0 0 7

2

0 0 9

2

0 1 1

2

0 1 3

2

0 1 5

Chile

Government revenue growth

(Chilean Peso)

Government expenditure growth

(Chilean Peso)

Managing Volatile Revenues

-40%

-20%

0%

20%

40%

60%

80%

100%

1

9 9 7

1

9 9 9

2

0 0 1

2

0 0 3

2

0 0 5

2

0 0 7

2

0 0 9

2

0 1 1

2

0 1 3

2

0 1 5

Venezuela

Government revenue growth

(Venezuelan Bolívar)

Government expenditure growth

(Venezuelan Bolívar)Source: IMF World Economic Outlook Database


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Expenditure volatility in Mongolia vs Ukraine

Data source: IMF WEO

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

Mongolia

General government revenue growth

General government total expenditure growth

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

Ukraine

General government revenue growth

General government total expenditure growth


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Mongolia’s Borrowing and Saving: Fiscal Balance


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Mongolia’s Borrowing and Saving: Debt Accumulation


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Makeup of Mongolia’s 2014 Exports

Source: The Atlas of Economic Complexity (http://atlas.cid.harvard.edu/explore/tree_map/export/mng/all/show/2014/) , this is a measurement of complexity that is

calculated based on how many different products a country can produce and the number of countries able to make those products

33

http://atlas.cid.harvard.edu/explore/tree_map/export/mng/all/show/2014/http://atlas.cid.harvard.edu/explore/tree_map/export/mng/all/show/2014/


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Makeup of Malaysia’s 2014 Exports

35Source: The Atlas of Economic Complexity (http://atlas.cid.harvard.edu/explore/tree_map/export/mng/all/show/2014/) , this is a measurement of complexity that iscalculated based on how many different products a country can produce and the number of countries able to make those products



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The Atlas of Economic Complexity: Country Rankings*

*Note: Due to number of countries covered, only select countries are labeled in this chart. Mongolia is ranked 114th

out of 124 countries.Source: The Atlas of Economic Complexity (http://atlas.cid.harvard.edu/explore/tree_map/export/mng/all/show/2014/) , this is a measurement of complexity that is

calculated based on how many different products a country can produce and the number of countries able to make those products

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

J a p a n

S o u t h K o r e a

C z e c h R e p u b l i c

U n i t e d K i n g d o m

S l o v a k i a

I r e l a n d

C h i n a

M e x i c o

E s t o n i a

M a l a y s i a

B e l a r u s

L i t h u a n i a

B o s n i a - H e r z e g o v i n a

P h i l i p p i n e s

U k r a i n e

G r e e c e

N e w Z e a l a n d

E l S a l v a d o r

S o u t h A f r i c a

V i e t n a m

E g y p t

A r g e n t i n a

M a c e d o n i a

G u a t e m a l a

K u w a i t

S e n e g a l

C u b a

A u s t r a l i a

Z a m b i a

C a m e r o o n

Q a t a r

B o t s w a n a

U g a n d a

B a n g l a d e s h

T u r k m e n i s t a n

M o z a m b i q u e

G a b o n

A l g e r i a

M a l a w i

L i b y a

G u i n e a

A n g o l a

E c o n o m i c C o m p

l e x i t y I n d i c a t o r S

c o r e

Mongolia(score of -1.41)

37



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Global Competitiveness Index: 2007-2015

2

3

4

5

6

7

S i n g a p o r e

S o u t h

K o r e a

C h i n a

C h i l e

A z e r b a i j a n

K a z a k h s t a n

R u s s i a

B r a z i l

U k r a i n e

T a j i k i s t a n

K y r g y z s t a n

M o n g o l i a

G l o b a l C o m p e t i t i

v e n e s s I n d e x S c o r e

2007 2015

Note: Mongolia’s rank in 2007 is 101 out of 131 and in 2015 is 104 out of 140.

Source: World Economic Forum, 2015-2016 Global Competitiveness Report, http://reports.weforum.org/global-competitiveness-report-2015-2016/

39

Best

Worst

http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/http://reports.weforum.org/global-competitiveness-report-2015-2016/


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2015 Open Budget Index:Mongolia scored 51 (ranked 39th among 102 countries)

0

10

20

30

40

50

60

70

80

90

100

N e w Z e a l a n d

N o r w a y

F r a n c e

U n i t e d K i n g d o m

G e r m a n y

G e o r g i a

S o u t h K o r e a

P o l a n d

A r g e n t i n a

S p a i n

B a n g l a d e s h

C o s t a R i c a

E l S a l v a d o r

D o m i n i c a n R e p u b l i c

M o n g o l i a

K e n y a

U k r a i n e

M a l i

T a n z a n i a

C a m e r o o n

B u r k i n a F a s o

S e n e g a l

T u n i s i a

S r i L a n k a

L i b e r i a

R w a n d a

T r i n i d a d & T o b a g o

A n g o l a

N i g e r i a

B o l i v i a

F i j i

C a m b o d i a

E q u a t o r i a l G u i n e a

M y a n m a r

O p e n B u d g e t I n d e x S c o r e

Source: International Budget Partnership 2015 Open Budget Index, http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/

41

Worst

Best

http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/


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2013 Resource Governance Index

98

92

8885

80

77 76 75 74 74 7370

6866

63 62 6158 57

56 56 5654 53 53

51 5048 47 47 47 46 46 46 46

43 43 43 43 42 42 41 4139 38

3734 34 33

31 3129 28

26

19

13

5 4

0

20

40

60

80

100

1 . N o r w a y

2 . U n i t e d S t a t e s ( G u l f o f M e x i c

o )

3 . U n i t e d K i n g d o

m

4 . A u s t r a l i a ( W e s t e r n A u s t r a l i a )

5 . B r a

z i l

6 . M e x i c o

7 . C a n a d a ( A l b e r t a )

8 . C h i l e

9 . C o l o m b

i a

1 0 . T r i n i d a d a n d T o b a g o

1 1 . P e

r u

1 2 . I n d

i a

1 3 . T i m o r - L e s

t e

1 4 . I n d o n e s i a

1 5 . G h a n a

1 6 . L i b e r i a

1 7 . Z a m b

i a

1 8 . E c u a d

o r

1 9 . K a z a k h s t a n

2 0 . V e n e z u e

l a

2 1 . S o u t h A f r i c a

2 2 . R u s s i a

2 3 . P h i l i p p i n

e s

2 4 . B o l i v

i a

2 5 . M o r o c c o

2 6 . M o n g o l i a

2 7 . T a n z a n

i a

2 8 . A z e r b a i j a n

2 9 . I r a q

3 0 . B o t s w a n a

3 1 . B a h r a

i n

3 2 . G a b o n

3 3 . G u i n e a

3 4 . M a l a y s i a

3 5 . S i e r r a L e o n e

3 6 . C h i n a

3 7 . Y e m e n

3 8 . E g y

p t

3 9 . P a p u a N e w G u i n e a

4 0 . N i g e r i a

4 1 . A n g o

l a

4 2 . K u w a i t

4 3 . V i e t n a

m

4 4 . C o n g o ( D R

C )

4 5 . A l g e r i a

4 6 . M o z a m b i q u e

4 7 . C a m e r o o n

4 8 . S a u d i A r a b

i a

4 9 . A f g h a n i s t a n

5 0 . S o u t h S u d a n

5 1 . Z i m b a b w

e

5 2 . C a m b o d

i a

5 3 . I r a n

5 4 . Q a t

a r

5 5 . L i b y a

5 6 . E q u a t o r i a l G u i n e a

5 7 . T u r k m e n i s t a n

5 8 . M y a n m

a r

43

Satisfactory (71-100)

Partial (51-70)

Weak (41-50)

Failing (0-40)

Source: Natural Resource Governance Institute: 2013 Resource Governance Index, http://www.resourcegovernance.org/rgi

2013 R G I d M li

http://www.resourcegovernance.org/rgihttp://www.resourcegovernance.org/rgihttp://www.resourcegovernance.org/rgi


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2013 Resource Governance Index: Mongolia

45

Source: Natural Resource Governance Institute: 2013 Resource Governance Index, http://www.resourcegovernance.org/rgi

http://www.resourcegovernance.org/rgihttp://www.resourcegovernance.org/rgihttp://www.resourcegovernance.org/rgi


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But does Governance Matter?

• OK, governance can be measured,

with caution

• But does it really matter?

47

D l t Di id d f d & ti


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Development Dividend of good governance & corruption

control: Resource-Rich vs. Non-Resource Rich countries

Sources: GDP per capita (atop each column) from World Bank World Development Indicators, 2012.

Corruption Control data from Worldwide Governance Indicators (WGI, 2012) Countries grouped into terciles based on WGI Controlof Corruption scores. Resource Rich country classification according to IMF (2010).

Poor Corruption Control Average CorruptionControl

Good CorruptionControl

G D P

p e r c a p i t a ( P P P )

Resource Rich Countries Non Resource Rich

5,000

0

10,000

6,851

3,941

12,712

10,272

45,000

30,820

49


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Domestic governance

International governance

Managing

revenues

Getting agood

deal

Discovery &deciding to

extract

Investing forsustainable

development

51

The Natural Resource Charter (NRC)

G S i i


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Global Lessons and Some Implications1. Consolidate & Build on earlier Transformative Achievements

in Poli t ical & Inst i tu t ional Dimensions of Governance

-- Political and Civil Liberties, Free Press-- Anti-Corruption program

-- Transparency reforms: i) Budget; ii) Mining Transparency:

Contracts, Beneficiary Ownership, Subnational, License

allocation, SOE (Erdenes), EITI +

2. Addressing major challenges in Econom ic Governance

-- Macroeconomic & debt management, lowering risks of default

or bailout: consensus o n prudent f iscal , monetary & debt pol ic ies

-- Realism on mining prices, & policies of Future Heritage Fund

-- Reality of global mining foreign investments (& ‘ art of negotiat ion ’)

-- Economic diversification program: imp lementat ion & macro.

‘Seizing the Moment’: Towards national consensus 53

mongolia governance keynote speech by daniel kaufmann

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