ABSTRACT
This chapter examines the development potential of Turkmenistan in the light of its natural resource endowment and social capital. It describes the natural resource endowment and evaluates the post-Soviet development strategy, noting the consequences of an unexpected deterioration in gas markets. The economic links with the Soviet Union extracted cotton and hydrocarbons from Turkmenistan in exchange for manufactured goods. The Turkmenistan government launched an ambitious ten-year development plan in 1993 which was designed to achieve the country's potential as a 'second Kuwait' as quickly as possible. Turkmenistan is one of the slowest reformers among the Central Asian components of the former Soviet Union, themselves a lagging group of countries. Privatization was pursued slowly in order to avoid both off-loading state assets at minimal prices and also the corruption associated with rapid privatisation in, for example, Russia. Labour reform proceeded slowly and labour markets remained far from flexible.
