Assessment of Impact of Trade on
Human Development
Turkmenistan
United Nations Development Programme
Authors and Methodology
• Main author – Institute of strategic
planning & economic development,
Turkmenistan
• Support from UNDP Country Office
• Quality assurance from BRC, UNDP
• Trade and human development –
methodology developed by UNDP
United Nations Development Programme
Issues Analyzed
1. Overview of the current situation of the
national economy
2. Analysis of the current state of domestic
trade
3. Current state of foreign trade
4. Possible implications of commodity
dependence
5. Prospects for trade development & its
impact on welfare
* All data from State Committee for Statistics
United Nations Development Programme
1. Overview of the current situation of
the national economy
• Difficult economic conditions in early stage
of independence: breakdown of the single
economic space, raw material bias, failure
to observe international obligations
regarding supply of consumers and capital
goods;
• Introduction of a national currency in
1993, economic legal framework, partial
price liberalization improved the financial
& economic situation
United Nations Development Programme
GDP (PPP) per capita, USD
12000
10600
9050
10000
7200
7500
8300
2005
2006
8000
5350
6000
5846
6299
4971
4000
2000
0
2000
2001
2002
2003
2004
2007
2008
United Nations Development Programme
Index of Consumer Prices Growth for all
types of goods, %
114
112
111.7
110.3
110
109
108
108.6
107.8
107.4
108.9
107.1
106
104
103
102
100
98
2000
2001
2002
2003
2004
2005
2006
2007
2008
United Nations Development Programme
Main Employment Statistics
2000
Population,
million
2001
2002
2003
2004
2005
2006 2007
4,933 5,014 5,089 5,158 5,237 5,323 5,402 5,479
Labour force, 2,608 2,691 2,780 2,866 2,953 3,054 3,150 3,238
Economically 2,119 2,179 2,243 2,303 2,369 2,442 2,510 2,554
active
Employed
1,908 1,947 1,996 2,039 2,094 2,156 2,211 2,255
Employed, %
90.0
89.4
89.0
88.6
88.4
88.3
88.1
88.3
United Nations Development Programme
Human Development Indicators
HDI
GDP
Education
Life expectancy
2003
0.748
0.63
0.92
0.64
2005
0.738
0.68
0.91
0.62
2009
0.739
0.651
0.906
0.661
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2. Analysis of the Current State of
Domestic Trade
• Structure and ownership in the retail
trade sector changed towards free
market principles – over 1994-2007 a
total of 718 trade & catering enterprises
have been denationalized (34% from
total privatised).
• Total physical volumes of retail trade quick growth; average annual growth in
2000-08 was 32.4%
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2. Structure of retail turnover by forms of
ownership, %.
100
91.9
90
80
70
64.3
60
50
2000
40
2007
30
20.1
20
10.3
10
6
5.3
1.7
0.4
0
Trading organizations
affiliated with ministries and
government departments
Small businesses
Foreign-owned businesses
and joint-ventures
Street markets
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2. Domestic Production of Consumer
Goods
• The level of import of consumer goods
considerable – estimated at 41%.
• Low competitiveness of several domestic sectors
that produce consumer goods, especially in light
and food industry.
• A large share of personal incomes leaves the
country for foreign goods producers.
• This suggests potential for development of
domestic production; includes food production,
fabric, clothes and household items. In 2008
there was an increase in physical output of some
consumer goods - mainly food items
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3. Current State Foreign Trade
• Trading and economic agreements with 24
countries.
• In 2000-08 external trade expanded by 4.1
times; exports increased by 4.8 times and
import by 3.2 times; average value of export
was 1.7 times higher than of imports. But…….
• Significant and increasing focus on
commodities; with predominant oil and gas
share; that makes the energy sector the main
factor in the country’s economic
development…
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Commodity Structure of Turkmen
Exports, %
100%
90%
18.3
17.4
13.7
13.3
13.8
85.5
81.7
82.6
86.3
86.7
86.2
2002
2003
2004
2005
2006
2007
20
16.5
14.5
80
83.5
2000
2001
7
80%
70%
60%
50%
40%
93
30%
20%
10%
0%
Share of oil & gas in exports
2008
Share of other commodities in exports
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3. Current State Foreign Trade cont.
• The share of other goods in Turkmenistan’s
exports insignificant; the share of cotton fibre in
total Turkmen exports declined from 19.7% in
1996 to 1.8% in 2008.
• Due to development of production with greater
value added – cotton fabrics. Development of
the domestic textile industry enables export of
cloth and finished textile products – yet, textile
products in total exports - only 5-6% of total
exports in 2005-07.
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3. Current State Foreign Trade cont.
• Agricultural production - 3.5% of total
exports;
• Chemicals industry – 1.5% of total export
• Hand made carpets area a traditional
Turkmen export and enjoy strong
international demand; yet, only small
share of Turkmen carpets are exported –
0.1% of total export; and less than 2% of
annual domestic carpet output.
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3. Current State Foreign Trade -export
• In total Turkmen exports are dominated by raw
materials, entailing heavy dependence on the
international price environment. The large
share of gas, oil and petroleum products in
exports means that the country has very little
room for manoeuvre in export policy.
• Gas export limited by the existing pipeline
system
• Positive – recently introduced pipeline to
China, Iran
• Negative – insufficiently diverse
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3. Current State Foreign Trade -Import
• In 2005-2008 – 78% of total import –
capital goods;
• The share of equipment & machinery –
27-30%; used to expand production of
goods for export (hydrocarbon
agriculture, textile);
• Consumer goods 1/3 of all import; grew
from 15.5% in 2006 to 33.7% in 2008 –
ICT, TV, other household items)
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3. Trade Partners
• Europe – 65.5%, Asia – 33.9%, CIS – 57%
Ukraine
2.5
Iraq
1.8
UAE
3.4
Afghanistan
1.6
China
3.4
USA
3.6
Russia
36.3
Italy
7.5
Turkey
9.7
Iran
14.2
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4. Possible Implications of Commodity
Dependence
Environment – 60% of all harmful air emissions comes
from the oil&gas sector;
500
450
437.5
400
373.8
350
300
250
192.5
200
160.1
150
100
50
0
2003
2008
Unfiltered pollutants
Filtered pollutants
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4. Possible Implications of Commodity
Dependence
• Dutch syndrome:
– dependence on hydrocarbon sector, with flow of investments into
that sector;
– Increase of wages, demand growth, higher prices, inflation; soci0economic inequality;
– Slow development of technologies and know how;
– Expansion of budget revenues (over 60%); most on social needs,
lower energy prices – inevitable cuts on social security and
negative impact on living standards……
• WTO – 95% of world trade turnover comes from countries WTO
members; determines the rules;
• Strategic issue for Turkmenistan, but not sufficiently studied:
– Impact of trade liberalization on production?
– Impact on social aspects? Employment? Labor market? welfare
level? …………..
• Not ready to seriously consider WTO accession; other very
important though related tasks are at hand
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5. Trade Development
• Government policy: integration into the global economy
– Diversification
• development of the processing industries other than extraction
– Development export oriented sectors
• Chemicals,
• Textile,
• Construction materials
– Private sector development:
•
•
•
•
SME;
Banking system development;
Access to credits,
Stimulation of SME foreign trade activity,
– Transport infrastructure to promote regional trade
cooperation
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• Feedback? Questions?
United Nations Development Programme