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EFFECTIVE USE OF FOREIGN AID TO DEVELOPMENT OF MONGOLIA A CASE STUDY ON POVERTY REDUCTION EFFORTS IN MONGOLIA, 1995-2015

Ariuntungalag Munkhtuvshin

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초록 moremore
Considering a number of available resources from both foreign aid and excessive income from the enormous mining resources, only a population of 3 million in Mongolia should be able to escape from an extreme levels of poverty and inequality after more than 25 years of struggle. However, still, more t...
Considering a number of available resources from both foreign aid and excessive income from the enormous mining resources, only a population of 3 million in Mongolia should be able to escape from an extreme levels of poverty and inequality after more than 25 years of struggle. However, still, more than 20% of the total population are living under the poverty line and the rate is even higher in rural areas. The gap between rich and poor in the country widened. The richest 20% of the population consumes five times the amount consumed by the poorest 20% of the population (Mongolian Economy web site, 2016). After closing the intimate donor-recipient relationship with Soviet Russia in the beginning of the 1990s, Mongolia became the fifth most aid-dependent country in the world by the beginning of 2000s (Luvsanjamts, 2005) and has still dependent on foreign aid and credit until today. Apparently, the country still struggles to surface definite developmental issues and poverty-related problems due to the following main flaws that this thesis mainly touches upon: 1) Deficiency in coherent state policy to mobilize outside resources to tackle the poverty; 2) Absence of aid effectiveness analysis; 3) inconsistency on poverty measurement methodology and the programs and 4) Insufficient level of government accountability and transparency. The thesis, therefore, aimed at exploring the ways to maximize foreign aid effectiveness in Mongolia through extensive analysis in the long term State Development Policy and effectiveness of poverty reduction programs implemented in Mongolia during the period of 1995-2015. Meanwhile, the thesis mainly concentrated 8 on institutional analysis at a social system level such as policy existence and enforcement, a higher level of partner engagement and level of government accountability in implementing the foreign aid funded poverty programs. Under this ultimate goal, the following few objectives were identified:  Scrutinize State policy framework on the effective/strategic use of foreign aids and developmental funds to reduce poverty in Mongolia;  Conduct aid effectiveness analysis on poverty reduction projects implemented in Mongolia during 1995-2015;  Investigate and recommend other policy options based on the analysis. Due to the uniqueness of the sector, the thesis largely used qualitative research method including desk review, in-depth standardized questionnaire interview with the key informants and secondary data analysis. Major limitations for the thesis was to obtain relevant data on aid and grant funding to Mongolia during the period of 1995-2015. Since the Government of Mongolia (GoM) started its initiative to integrate all the foreign aid and credit amount just in two years, integrated data base has not been established yet and inaccessible. Data used in this thesis is mostly from the secondary source, which is retrieved from survey reports or scholarly articles. There are a number of different indicators being used by different entities for various reasons. Most popular framework to measure aid effectiveness currently is the framework that developed by Organization for Economic Co-operation and Development (OECD), the Global Partnership for Effective Development Co-operation and UN. The organizations are cooperated to develop a comprehensive set 9 of indicators to measure Development aid effectiveness throughout the world in order to make a more effective use of aid fund to the developing world by providing frequent measurement and monitoring data. The aid effectiveness framework mentioned here has bounded by four different principles: focus on results, country ownership, inclusive partnership, transparency, and accountability (OECD, the Global Partnership for Effective Development Co-operation and UN, 2016). Each principle contains a broad range of qualitative and quantitative indicators. During this study, five core indicators associated with the Principle four: Transparency and Accountability were used to picture overall achievement and failure that the Mongolia did during past 20 years of a period when receiving aid or development fund from outside world. Since all five indicators have worked well to capture a general picture of the country’s aid effectiveness status, the thesis decided to focus only on those five indicators and conducted its qualitative survey using them. Moreover, each of those five indicators somehow aligned with the core four principles. Those are: 1) An aid or partnership policy; 2) Country-level of targets; 3) Regular joint assessment of progress against targets; 4) Local governments and non-state stakeholders included in the assessments; 5) Public availability of the results
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LIST OF TABLE 6
LIST OF CHARTS 6
ABSTRACT 7
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LIST OF TABLE 6
LIST OF CHARTS 6
ABSTRACT 7

CHAPTER ONE. INTRODUCTION 10
1.1 THESIS GOAL 13
1.2 RESEARCH METHODOLOGY 14
1.3 RESEARCH QUESTIONS 16
1.4 LITERATURE REVIEW 16
1.5 THEORITHICAL AND PRACTICAL CONTRIBUTION OF THE STUDY 19
1.6 ASSUMPTION/HYPOTHESIS 20
1.7 EXPLANATION OF KEY TERMONOLOGY 20
1.8 THESIS LIMITATIONS 22

CHAPTER TWO. SOCIAL THEORY ON DEVELOPMENT AND AID INDUSTRY 23

CHAPTER THREE. POVERTY REDUCTION PROGRAMS IN MONGOLIA, 1995-2015 29
3.1 Brief history of poverty reduction program in Mongolia during 1995-2015 29
3.2 Effectiveness of poverty reduction program in Mongolia during 1995-2015 37

CHAPTER FOUR. ANALYSIS ON AID EFFECTIVENESS IN MONGOLIA DURING 1995-2015 43
4.1 An aid or partnership policy 46
4.2 Country-level of targets 48
4.3 Regular joint assessment of progress against targets and Local governments and non-state stakeholders included in the assessments 49
4.4 Public availability of the results 52

CONCLUSION 57

RECOMMENDATION 62

Bibliography 65

APPENDIX 68