The aim of this report is to identify aset of concrete steps that the government of Mongolia mighttake to promote private-sector activity and greaterintegration with the global economy in a way that leads tojob creation, broad-based growth and most importantly,poverty reduction. It does this by combining an assessmentof the investment climate faced by firms (through analysesof firm and household surveys and supply chains in selectedsectors) with a diagnostic trade integration study. Thereport is structured as follows. The second chapter lays outthe context and background and describes some recent trendsthat give some indications of where things stand. This isfollowed in the third and fourth chapters, which constitutethe core of the report, by a detailed mapping of the mainaspects of the business environment and the setting fortrade. The focus in these chapters is on the aspects of thebusiness environment that most need improvement, and on thebarriers to trade integration that are the most severe. Thefifth chapter lays out the basic diagnosis. The sixth andseventh chapters then outline what the analysis indicates asthe most important steps that need to be taken to improvethe business environment and facilitate trade integration.