Mongolia : Research University Development Project

Education / Tertiary

Mongolia's economy was hit hard by the COVID-19 pandemic, recording negative growth of gross domestic product (GDP) (-5.3%) and jobs (-5.4%) in 2020. Apart from agriculture whose value added grew by 6.2%, all other sectors experienced contraction, including mining (-9.4%), other industry (-1.6%), and services (-7.1%). MSMEs, which account for about 77.0% of total registered business entities and 72.0% of employment, particularly suffered from revenue falls, liquidity and cash flow problems, and reduction in product and service offerings and employees, even if business closures were avoided. The labor force participation rate declined from 60.5% (53.4% for women, 68.3% for men) in 2019 to 58.7% (51.7% for women, 66.7% for men) in 2020. Many faced temporary employment disruptions, if not long-term job losses, in 2019-2020.

The impact of the COVID-19 pandemic on employment varied across sectors. While some sectors (health, finance, information technology, education, trade, and transportation) saw rise in employment in 2019-2020, most sectors experienced mild to sharp decrease, with worse impacts on low-skilled and informal sectors. Negative effects of the pandemic were also felt by enterprises, especially MSMEs, in sectors that were slow to adopt digital technologies, less R&D-intensive, and more reliant on global supply chains, such as construction, entertainment, manufacturing, and tourism. Overall, the capacity and readiness to pursue digital transformation, as well as R&D performance, and technology and knowledge outputs, need to be improved across sectors, despite significant investments in telecommunications and high smartphone ownership and penetration.

The COVID-19 pandemic highlighted the importance of R&D and innovation globally---for the development of vaccines, therapeutics, and digital tools to mitigate pandemic impacts, and for policy making in rapidly changing environments. Such global prominence of R&D and innovation provides the impetus for increased investments in R&D and innovation which are essential for middle-income countries like Mongolia to enhance productivity and competitiveness and achieve inclusive and sustainable growth. However, the COVID-19 pandemic also presents the challenge to reducing widening gaps in R&D and innovation between countries, firms, and universities and research institutes, favoring those with financial and human resources. In Mongolia, the pandemic severely affected private sector employment in professional, scientific, and technical services, reducing jobs by 34.0% from 2019 to 2020.

Mongolia's R&D and innovation performance suffers from years of underinvestment. Gross domestic expenditure on R&D as a percentage of GDP was 0.2% in 2018, which indicates a downward trend since 1990 and is well below the average (1.9%) among developing countries in Asia. The number of R&D personnel was 3,026 (1,484 women, 1,542 men) in 2018, of whom 67.7% worked in PRIs (52.3% women), followed by 26.9% in higher education institutions (HEIs, 43.9% women), and 5.4% in business enterprises (33.5% women). A large proportion of R&D in terms of expenditure was conducted by PRIs (60.2%), while the shares of HEIs (31.2%) and business enterprises (8.6%) were relatively small. Most research conducted by PRIs does not directly result in practical applications. The number of patents granted annually remains low---347 in 2018, 407 in 2019, and 349 in 2020.

Lack of system for developing highly skilled workers. To reverse the downward trend in R&D and innovation performance, Mongolia needs to build a system for developing highly skilled workers capable of driving digital transformation, R&D, and innovation. The current higher education system in Mongolia largely remains under the influence of the system in the former Soviet Union where universities focused on teaching at the undergraduate (bachelor's degree) level, whereas the Academy of Sciences and its research institutes conducted research. Most R&D personnel currently employed at PRIs were trained abroad. Only after Mongolia started to transition from a centrally planned to a market economy in 1990, some key state-owned universities began to offer graduate education (master's and doctoral degree) programs. As of school year (SY) 2018, there were 94 HEIs (18 state-owned and 76 private), of which 29 (12 state-owned and 17 private) offered master's and doctoral degree programs (27 were in Ulaanbaatar). Of 157,625 students (57.2% women) enrolled in HEIs, 22,499 or 14.3% studied in master's degree programs (64.7% women) and 4,219 or 2.7% in doctoral degree programs (57.2% women). Even at the six key state-owned universities, the proportion of students in master's and doctoral degree programs was on average 18.1%, lower than that at some first-tier universities in developing Asia.

Economic competitiveness and diversification increased; quality jobs generated; and inclusive and sustainable growth accelerated

Foundations for developing research universities that address Mongolia's development challenges strengthened

Policies and institutions for enhancing graduate education and research to international standards developed

Systems for supporting research and research commercialization developed

Centers of excellence that address Mongolia's development challenges successfully operated