Chinggis Khaanonomics – steepe-ing out in Mongolia
This is a guest post from Tim Harcourt, Chief Economist of the Australian Trade Commision (Austrade). As chief economist Tim analyses the global economy to help Australian exporters and helps Austrade devise its own international business strategies. Tim is also a Future Summit Australian Leadership Awardee and guest blogger hear at the Future Summit blog. This is an extract from his latest post at the Austrade website. You can see the full post there.
Who invented free trade? Was it the British Economist David Ricardo (whose masterful explanation of the principles of comparative advantage has become a text book favourite for economic students ever since)? Well, Ricardo may have advocated free trade in theory but its origins in practice come from a more unlikely historical source. On a recent trip to Mongolia, the airport economist learnt that it was in fact the famous Mongolian war load Chinggis Khaan, who can in some way, claim to be the father of free trade.
In fact, Chinggis Khaan (popularly known in the west as Genghis Khan thanks to a faulty translation) was the father of many things and many people – around one quarter of Mongolians claim to be a descendant - so old Chinggis must have been a busy boy when we wasn’t fighting and conquering his neighbours. In fact, the whole historical legacy of Chinggis Khaan is fascinating. Whilst in Ulaan Bataar, the airport economist learned that Khaan first developed the principle of free trade when he abolished tariffs between the provinces of the Mongol empire. He also developed the world’s first ever passports (for all those travelling in his vast empire that stretched all the way from China to Europe) and the world’s first postal service whilst basically conquering the world in his spare time.
But what about modern Mongolia? It was of course a communist state from the 1920s to the 1990s, with a lot of Russian influence (and suspicion about Beijing). They went through a difficult period after the fall of communism as did many former Soviet influenced states with mass unemployment and a breakdown in instutions. But the times in Mongolia may be a-changing.
In fact, The airport economist happened to be in UB at an important historical moment in modern Mongolian economic history. Whilst in the country, Ivanhoe resources – of which Rio Tinto has a strategic stake – announced its agreement with the Mongolian government to develop copper and gold deposits in Oyu tolgoi. The agreement, which was 7 years in the making, is expected to have a major impact on Mongolia’s future economic prospects. According to Chad Blewitt, Ivanhoe’s chief financial officer (on secondment from Rio Tinto), the project will “double Mongolia’s GDP of $US 5 billion and the mine deposit will become one of the 5th largest mines in the world.” Blewitt believes “this place could be like Dubai in 5 years time, but they’ve got to manage the revenues and ensure that they have the right skill mix in the labour market to make it all happen.”
You can read the full post at http://www.austrade.gov.au/Chinggis-Khaanonomics-steepe-ing-out-in-Mongolia/default.aspx




