The welfare state in Mongolia is relatively new, along with the development of an open market economy. Due to the welfare state being so recently established in the mid-1990s, Mongolia faces a range of diverse pressures and challenges as a result of changing economic, social, and demographic circumstances: transition from recently being a planned economy; financial challenges for the government; decline in the relative standard of living; an increase in poverty; deterioration of the general measures of health in the population; and, growth in the numbers of unemployed. Since 2004, the rapid expansion of social welfare programs has been a new phenomenon for Mongolia, which was partly made possible by economic growth in tandem with new political will to represent the needs of the people, in order to influence political capital gained during elections.

The purpose of this study is to analyze the structure and context of these changes and challenges that are occurring in Mongolia. In addition, this study aimed to explore the various driving forces that have formulated Mongolian welfare reform over the last two decades. This study also compared these welfare developments with those in other post-communist countries which have experienced similar economic transitions.

The study found that the welfare state in Mongolia has rapidly transformed the society when compared with other previously socialist countries. Overall, it has several similarities to the post-communist countries of Central Eastern Europe and to Russia, in terms of being an economy in transition as well as other challenges stemming from the process of transformation. The development of social welfare in Mongolia has mainly resulted in the increase of political promises rather than systematic and outcome-based policy change during the period 1990-2010. The social welfare system has not achieved great success as yet. The social welfare system in Mongolia is still young and needs to be improved at all levels and stages of policy and decision-making, as well as during the implementation stage.