Mongolia is a parliamentary republic. The parliament is elected by the people and in turn elects the government. The president is elected directly. Mongolia's constitution guarantees full freedom of expression, religion, and others. Mongolia has a number of political parties, the biggest ones being the Mongolian People's Revolutionary Party (MPRP) and the Democratic Party (DP). The MPRP formed the government of the country from 1921 to 1996 (until 1990 in a one-party system) and from 2000 to 2004.
From 2004 to 2006, it was part of a coalition with the DP and two other parties, and since 2006 it has been the dominant party in two other coalitions. Both changes of government after 2004 were initiated by the MPRP. The DP was the dominant force in the ruling coalition between 1996 and 2000, and also an approximately equal partner with the MPRP in the 2004-2006 coalition. The latest parliamentary election was held on 29 June 2008. A total of 76 new parliament members were elected from 26 electoral districts throughout the country.

Economic activity in Mongolia has traditionally been based on herding and agriculture. Mongolia has extensive mineral deposits. Copper, coal, gold, molybdenum, fluorspar, uranium, tin, and tungsten account for a large part of industrial production and foreign direct investment. Soviet assistance, at its height one-third of GDP, disappeared almost overnight in 1990 and 1991 at the time of the dismantlement of the USSR. The following decade saw Mongolia endure both deep recession because of political inaction and natural disasters, as well as economic growth because of reform-embracing, free-market economics and extensive privatization of the formerly state-run economy.
Severe winters and summer droughts in 2000-02 resulted in massive livestock die-off and zero or negative GDP growth. This was compounded by falling prices for Mongolia's primary sector exports and widespread opposition to privatization. Growth was 10.6% in 2004, 5.5% in 2005, 7.5% in 2006, and 9.9% in 2007 largely because of high copper prices and new gold production. Mongolia is experiencing its highest inflation rate in over a decade as consumer prices in 2007 rose 15%, largely because of increased fuel and food costs. Mongolia's economy continues to be heavily influenced by its neighbors.