2014 Index of Economic Freedom

Turkmenistan

overall score42.2
world rank171
Rule of Law

Property Rights5.0

Freedom From Corruption13.4

Limited Government

Government Spending93.0

Fiscal Freedom95.2

Regulatory Efficiency

Business Freedom30.0

Labor Freedom30.0

Monetary Freedom65.9

Open Markets

Trade Freedom79.2

Investment Freedom0.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 5.6 million
  • GDP (PPP):
    • $48.9 billion
    • 11.0% growth
    • 11.1% 5-year compound annual growth
    • $8,718 per capita
  • Unemployment:
    • 60.0%
  • Inflation (CPI):
    • 4.9%
  • FDI Inflow:
    • $3.2 billion
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Turkmenistan’s economic freedom score is 42.2, making its economy the 171st freest in the 2014 Index. Its score is 0.4 point lower than last year due to declines in freedom from corruption and monetary freedom. Turkmenistan is ranked 41st out of 42 countries in the Asia–Pacific region, and its overall score is significantly lower than the world and regional averages.

Turkmenistan’s economic freedom was first assessed in the 1998 Index, and its score has advanced since then by about 7 points. Its overall score increase, driven by very large gains in monetary freedom, trade freedom, and fiscal freedom, masks significant declines in business freedom, investment freedom, and the protection of property rights.

Charting a downward path of economic freedom in recent years, Turkmenistan continues to be mired in the ranks of the “repressed” economies. Reforms intended to improve the business and investment climates have been largely undermined in practice. The economy remains heavily reliant on the energy sector, which is dominated by state-owned enterprises and firms specifically chosen by the government for investment. Corruption continues to erode the business environment, severely undermining the rule of law and encouraging cronyism.

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Background

President Gurbanguly Berdymukhammedov was re-elected in February 2012 in elections regarded as flawed by international observers. The presidency controls all three branches of government, the economy, social services, and the mass media. Berdymukhammedov’s policies are somewhat more open than those of his predecessor, Saparmurad Niyazov (Turkmenbashi), but the government still tends toward isolationism. Berdymukhammedov has encouraged some foreign investment in the energy sector, especially from Russia, China, and Iran. Turkmenistan boasts the world’s fifth largest natural gas reserves and has signed a deal to supply Afghanistan, India, and Pakistan with gas through the 1,000-mile TAPI pipeline.

Rule of LawView Methodology

Property Rights 5.0 Create a Graph using this measurement

Freedom From Corruption 13.4 Create a Graph using this measurement

Corruption is widespread, with public officials often forced to bribe their way into their positions. The judicial system is subservient to the president, who appoints and removes judges without legislative review. The legal system does not enforce contracts and property rights effectively. Laws are poorly developed, and judges are poorly trained and open to bribery. All land is owned by the government, and other ownership rights are limited.

Limited GovernmentView Methodology

The top individual income tax rate is a flat 10 percent, and the top corporate tax rate is 8 percent. A 20 percent rate applies to legal entities with foreign participation. Other taxes include a value-added tax (VAT) and a property tax. The overall tax burden equals 17.8 percent of gross domestic income. Public expenditures are 15 percent of GDP. Public debt has been rising but is a modest 16 percent of gross domestic output.

Regulatory EfficiencyView Methodology

The regulatory system is highly arbitrary, and enforcement is inconsistent. Personal relations with government officials are often required to cut through red tape. The public sector provides most jobs, and the informal sector remains an important source of employment. Although some were reduced in 2013, state subsidies for fuel and food as a percentage of GDP are still among the highest in the world.

Open MarketsView Methodology

The most recently reported average tariff rate was 2.9 percent. Slow customs procedures impede trade, and the government does not allow people to import cars that are more than five years old. State-owned enterprises dominate several sectors of the economy. The financial system remains heavily government-controlled, and the flow of financial resources is severely restricted. The private sector’s access to credit is very limited.

Country's Score Over Time

Bar Graph of Turkmenistan Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Turkmenistan to other economic country groups

Regional Ranking

rank country overall change
1Hong Kong90.10.8
2Singapore89.41.4
3Australia82-0.6
4New Zealand81.2-0.2
5Taiwan73.91.2
6Japan72.40.6
7Macau71.3-0.4
8South Korea71.20.9
9Malaysia 69.63.5
10Kazakhstan63.70.7
11Thailand 63.3-0.8
12Azerbaijan61.31.6
13Samoa61.14.0
14Kyrgyz Republic 61.11.5
15The Philippines60.11.9
16Sri Lanka60-0.7
17Vanuatu59.52.9
18Mongolia58.9-2.8
19Fiji58.71.5
20Indonesia58.51.6
21Tonga58.22.2
22Cambodia57.4-1.1
23Bhutan56.71.7
24India55.70.5
25Pakistan 55.20.1
26Bangladesh 54.11.5
27Papua New Guinea53.90.3
28China52.50.6
29Tajikistan52-1.4
30Laos51.21.1
31Maldives512.0
32Vietnam50.8-0.2
33Nepal50.1-0.3
34Micronesia49.8-0.3
35Burma46.57.3
36Uzbekistan46.50.5
37Kiribati46.30.4
38Solomon Islands46.21.2
39Timor-Leste43.2-0.5
40Turkmenistan42.2-0.4
41North Korea1-0.5
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