Privatization, Income Distribution, and Poverty: The Mongolian Experience

The transition to a market economy, in which privatization of state owned assets plays a central role, has been accompanied in many instances by a significant deterioration in the distribution of income and large increases in poverty. This paper investigates to what extent the choices made with respect to privatization contributed to these distributional changes in the case of Mongolia. It finds that some of the methods chosen and the manner of their implementation were significant. As many assets still remain in state hands and a number of controversial privatizations are proposed, the paper makes some suggestions to reduce the adverse distributional consequences. © 2006 Elsevier Ltd. All rights reserved.