In 1990 Mongolia abandoned its 70-year-old Soviet-style one-party state and embraced political and economic reforms.
Democracy and privatisation were enshrined in a new constitution, but the collapse of the economy after the withdrawal of Soviet support triggered widespread poverty and unemployment.
However, Mongolia sits on vast quantities of untapped mineral wealth, and foreign investment in a number of gigantic mining properties is expected to transform its tiny economy in coming years. Analysts say it could become one of the world's fastest growing economies.
Once the heartland of an empire stretching to Europe under Genghis Khan, Mongolia is a landlocked country dominated by sparsely populated steppe and semi-desert.
Mongolia spreads across 1.5 million sq km of the Central Asian plateau, but its population is far smaller than the Mongol population of China.
Sunni Muslim Kazakhs in the west are the only significant national and religious minority, comprising some 5% of the population. Migration to Kazakhstan in the 1990s reduced their numbers.
A third of the population lives in the capital, while around forty percent of the country's workforce herds livestock in Mongolia's extensive pasturelands. However, the centuries-old nomadic lifestyle is coming under pressure from climate change and urbanisation.
Mongolia has an extreme climate, with a temperature range to suit. Droughts and unusually cold and snowy winters have decimated livestock, destroying the livelihoods of thousands of families.
Mongolia has expanded political and financial ties with the US, Japan and the European Union, but its main trading partners are neighbouring Russia and China. The latter is the biggest market for Mongolian exports; Beijing is also keen to exploit Mongolia's mineral and energy resources.
Despite generous funding by the International Monetary Fund and donor countries, economic progress has been slow and growth has been hampered by corruption.
The legacy of Genghis Khan, the warrior who united warring tribes and established the Mongol empire in the 13th century, has been invoked in an attempt to foster national pride.
* Full name: Mongolia
* Population: 2.7 million (UN, 2010)
* Capital: Ulan Bator
* Area: 1.56 million sq km (603,909 sq miles)
* Major language: Mongolian
* Major religion: Buddhism
* Life expectancy: 65 years (men), 73 years (women) (UN)
* Monetary unit: 1 Togrog (tugrik) = 100 mongos
* Main exports: Copper concentrate, dehaired cashmere, textiles, hides
* GNI per capita: US $1,850 (World Bank, 2010)
* Internet domain: .mn
* International dialling code: +976
President: Tsakhiagiin Elbegdorj
Tsakhiagiin Elbegdorj Mr Elbegdorj was elected on a pledge to fight graft and poverty.
Standing for the opposition Democratic Party, Mr Elbegdorj won just over 51% of the vote, to 47% for Mr Enkhbayar, whose ruling Mongolian People's Revolutionary Party (MPRP) said it accepted the result as fair.
The peaceful outcome came after fears of a repeat of the violence which followed opposition claims of fraud after the Democratic Party's defeat in the 2008 parliamentary elections.
To achieve the second aim, he planned to tighten rules for contracts under which foreign mining firms operate.
His message proved popular in the big cities, especially the capital Ulan Bator, and was helped by widespread poverty.
However, he faced a parliament which continued to be dominated by a solid MPRP majority, but the then MPRP prime minister, Sanjagiin Bayar, promised to ensure that his government would work well with the president.
Although the prime minister and parliament exercise real political power, the president heads the armed forces and has the power of veto in parliament. Frequent changes of government have enhanced the role of the presidency.
Born in 1963, Tsakhiagiin Elbegdorj was one of the leaders of the peaceful revolution that ended the Communist dictatorship in 1990.
Since then, he has served as prime minister twice, briefly in 1998, and in 2006-8.
Prime Minister: Sukhbaataryn Batbold
Foreign Minister Sukhbaataryn Batbold became prime minister unexpectedly in October 2009 when his predecessor Sanjagiin Bayar resigned for health reasons.
Mr Batbold consolidated his hold on power when he also took over from Mr Bayar as leader of the Mongolian People's Revolutionary Party (MPRP) in April 2010. The party renamed itself the Mongolian People's Party in November 2010.
Born in 1963, Mr Batbold ran the Mongolian side of a major gold-mining venture with the Canadian company Centerra Gold in 1992-2000, and his wife now runs his hotel and cashmere industry interests in the Altai Trading Company.
Mr Batbold has continued his predecessor's policy of encouraging foreign investment in the mining industries.
From : BBC News