Located on the eastern shore of the Caspian Sea, Turkmenistan is a former Soviet republic with few diplomatic relations. It sits on large natural gas resources, with the majority of exports going to the Russian company Gazprom . A classic rentier state, Turkmenistan’s economy relies almost exclusively on this resource.
This large resource endowment has both positive and negative consequences for Turkmenistan. The negative consequences, sometimes referred to as the resource curse, stem from the idea that whoever controls the resource rents has control of the country. As a result, Turkmenistan often ranks poorly in indices such as the Corruption Perception Index. The low unemployment rate is a result of many workers earning a government salary for relatively irrelevant jobs, simply because they have political connections. This kind of employment is not economically efficient and leaves the country exposed to risks to its major resource, in this case natural gas. Similarly, young people who are not connected struggle to find work in spite the fact that they are often more qualified than existing workers. This leads to higher youth unemployment and reduces the competitiveness of the labor force.
National debt remains low because of the high taxes the country can collect from gas exports. These resource rents can contribute to higher government spending, which translate to improved social programs. The effects of this can be seen in the decreasing infant mortality rate, for example. The decreasing death rate also points to the increasing efficacy of healthcare in the country, indicating that residents are benefitting from these revenues. The resource independence also leads to political independence, as seen by Turkmenistan’s production of a pipeline to China. In turn, China has included Turkmenistan in part of its Belt and Road Initiative, which could be an opportunity for Turkmenistan to diversify both its economic and political ties.
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