Policy for Productivity

UB Post

April 09,2010

The key policy of the Mongolian government has now turned into the distribution of grants. Our government has mobilizing all of its efforts and minds for thinking up the ways of fulfilling the promises they gave to voters in order to get to power and for giving at least of half of their promises.

It would be fruitful for the country’s economic and social development if the government focused its policy and actions on not backward-looking but forward-looking long-term tasks defined precisely.

The first thing they thought up was to set up a so-called Human Development Fund, which is indeed a grant fund. Through this grant fund, the coalition government is trying to give at least what one party pledged, before next elections by giving money in small instalments. They had no other way but to say their promises once again after the people demonstrated in mass and demanded their promise fulfilled.

They are playing cat and mouse with its people over their promise to give cash and this theme has become a core concern in political and social life of Mongolia, making both politicians and citizens believe that the cash grant is the key to development. It has turned that principal duty of citizens is to keep poor while basic responsibility of the government is to take care of and feed them.

Level of social development in any country largely depends on only which this country’s policy is focused on. We all know that the government has two principal duties. These are to protect and produce. It means the government must protect human right, freedom and property and produce and supply those services and products the private sector is not capable of doing alone. Depending on what the policy of government’s creation duty is focused on, the countries reach different level of development within same period of time. A survey conducted by professors from the Harvard University established that policy of those countries that managed to develop rapidly given similar period of time and conditions is based not only on grants but also on productivity. Clear examples of this fact are Finland, South Korea, Taiwan and Singapore.

According to the Harvard survey, national wealth and living standard in any country is determined not by natural resource, cheap labor force and financial wealth but by its productivity. The productivity includes a worker’s income and input of capital he makes per hour. The environment that creates this productivity depends on competitiveness or on if there is informati

on, encouragement and pressure from competitors which support productivity growth in a particular industry. Moreover it relies on the availability of qualified and experienced personnel in supplying company of a particular industry, relevant institutions, infrastructure and in a particular locality. Therefore, the government must create this condition.

Only the country that manages to organize its government policy, legislations and institutions based on productivity, is capable of improving its productivity. In this process, its economy gets more diversified. Every country is not able to develop every industry and to become a leader in all of them.

Business cluster is created and productivity is increased in a place where businesses, suppliers, and associated research and development institutions interconnected in a particular field are concentrated. Thus, the key duty and responsibility of the government is to locate and employ its human and capital resource in a highly effective way. Every government should seek to build that environment and condition in which companies strive to introduce new and more productive technology and practice and penetrate into success-promising industry.

If economic objective of the country is not defined by long-term productivity growth, then unimportant short-ranged policy begins to pull back government actions. If businesses of a particular field always manage to seek for the new and keep them updated and innovated, then that field becomes more competitive and further builds own position in international market. It is almost an established custom that high productivity jobs stay in the industry while low productivity jobs go out abroad.

Today, Mongolia needs to use its non-restorable natural resources based on long-ranged proper policy to lay right and firm foundation for further prosperity enjoyed by from generation to generation.

We need to concentrate our government policy not on grants but on productivity like we need air to breathe and water to drink.