The inequalities between rural and urban incomes arguably pose the biggest challenge for poverty reduction. Furthermore, Mongolia suffers from weak government effectiveness (the 2013 Ease of Doing Business rank is 138 out of 185 countries), there is a mismatch between the skills of the labour force and the skills demanded by employers, private sector firms operate below capacity due to insufficient talent and economic diversification is limited.

The Government of Mongolia is addressing these issues by strengthening vocational training, increasing social security coverage, promoting employment for disadvantaged groups, and investing in disadvantaged urban areas. Support for getting unemployed youth into the workforce has been provided under a recent government programme, but there is also a need to build policy development capacity and develop a long-term strategy focused on achieving inclusive growth. Meeting this need will create and expand economic opportunities, particularly productive employment and ensure broader community access to employment and other benefits from growth.

In association with the Mongolian Center for Development Studies, since July 2013 we have been facilitating improvements in policy development capacity and the Government’s ability to formulate a medium-term strategic plan for inclusive growth. This includes institutional development for the Cabinet Office, the Ministry of Finance, and the Ministry of Economic Development on mechanisms and indicators for monitoring inclusive growth in government monitoring systems. The project will improve the capacity of public and private stakeholders to develop policies on inclusive growth.