2013 Index of Economic Freedom

Turkmenistan

overall score42.6
world rank169
Rule of Law

Property Rights5.0

Freedom From Corruption16.0

Limited Government

Government Spending91.7

Fiscal Freedom94.0

Regulatory Efficiency

Business Freedom30.0

Labor Freedom30.0

Monetary Freedom70.6

Open Markets

Trade Freedom79.2

Investment Freedom0.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 5.5 million
  • GDP (PPP):
    • $43.4 billion
    • 14.7% growth
    • 11.1% 5-year compound annual growth
    • $7,846 per capita
  • Unemployment:
  • Inflation (CPI):
    • 5.8%
  • FDI Inflow:
    • $3.2 billion
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Turkmenistan’s economic freedom score is 42.6, making its economy the 169th freest in the 2013 Index. Its score is 1.2 points lower than last year, with substantial declines in property rights and fiscal freedom. Turkmenistan is ranked 39th out of 41 countries in the Asia–Pacific region, and its overall score is significantly lower than the world and regional averages.

Turkmenistan remains a one-party state that intrudes deeply into many institutions and economic activities. Corruption has continued to erode the business environment, severely undermining the rule of law and encouraging cronyism. An inefficient regulatory framework further burdens potential entrepreneurs, discouraging private-sector growth and long-term development. 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.

Marginal improvements have occurred as efforts have been made over the past few years to reduce subsidies and promote special development zones. However, these reforms have not had broad impact. Comprehensive measures to increase economic freedom for the whole of society, such as increasing business freedom and investment freedom, have not been implemented.

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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, and the media. Berdymukhammedov’s policies are somewhat more open than those of his predecessor, Saparmurad Niyazov (Turkmenbashi). He has encouraged some foreign investment in Turkmenistan, which exports gas, oil, and petrochemicals, primarily to Russia, China, and Iran, and claims to have the world’s fifth-largest natural gas reserves. In 2010, new pipelines to China and northern Iran effectively ended Russia’s control of Turkmenistan gas exports. Relations with Russia have deteriorated. The double-digit economic growth of recent years appeared to be slowing somewhat in 2012.

Rule of LawView Methodology

Property Rights 5.0 Create a Graph using this measurement

Freedom From Corruption 16.0 Create a Graph using this measurement

The legal system does not enforce contracts and property rights effectively. Laws are poorly developed, and judicial employees and judges are poorly trained and open to bribery. All land is owned by the government, and other ownership rights are limited. Laws to protect intellectual property rights are implemented arbitrarily if at all. Pirated copies of copyrighted and trademarked materials are widely available. Corruption remains rampant.

Limited GovernmentView Methodology

The income tax rate is a flat 10 percent, and the corporate tax rate is 8 percent. Other taxes include a value-added tax (VAT) and a property tax. The total tax burden equals nearly 21 percent of total domestic income. Government spending has risen to 16.7 percent of total domestic output. Budget surpluses have been recorded, and public debt remains below 20 percent of GDP. Gas exports to China have sustained government spending and revenues.

Regulatory EfficiencyView Methodology

The overall freedom to form and operate a business is very limited under the inefficient and non-transparent regulatory framework. 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. Monetary stability has been weak.

Open MarketsView Methodology

The trade-weighted average tariff rate is 2.9 percent, but customs procedures interfere with imports. The government controls most of the economy and restricts foreign participation to a few sectors. Foreign exchange accounts require government approval, as do all payments and transfers. The underdeveloped financial system remains heavily government-controlled, with 90 percent of all loans directed to state-owned enterprises.

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 Kong89.3-0.6
2Singapore880.5
3Australia82.6-0.5
4New Zealand81.4-0.7
5Taiwan72.70.8
6Japan71.80.2
7Macau71.7-0.1
8South Korea70.30.4
9Malaysia 66.1-0.3
10Thailand 64.1-0.8
11Kazakhstan63-0.6
12Mongolia61.70.2
13Sri Lanka60.72.4
14Azerbaijan59.70.8
15Kyrgyz Republic 59.6-0.6
16Cambodia58.50.9
17The Philippines58.21.1
18Fiji57.2-0.1
19Samoa57.1-3.4
20Indonesia56.90.5
21Vanuatu56.60.0
22Tonga56-1.0
23India55.20.6
24Pakistan 55.10.4
25Bhutan55-1.6
26Papua New Guinea53.6-0.2
27Tajikistan53.40.0
28Bangladesh 52.6-0.6
29China51.90.7
30Vietnam51-0.3
31Nepal50.40.2
32Micronesia50.1-0.6
33Laos50.10.1
34Maldives49-0.2
35Uzbekistan460.2
36Kiribati45.9-1.0
37Solomon Islands45-1.2
38Timor-Leste43.70.4
39Turkmenistan42.6-1.2
40Burma39.20.5
41North Korea1.50.5
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