Richard Auty / Natural Resources Forum 27 (2003) 255–266 255

Natural Resources Forum 27 (2003) 255–266

Natural resources and ‘gradual’ reform in

Uzbekistan and Turkmenistan
Richard Auty

Abstract
Among low-income transition reformers, natural resource rents are an important initial condition that helps explain choice
of reform strategy. Resource-rich Uzbekistan and Turkmenistan and resource-poor China and Vietnam all claim to pursue
gradual reform, but their strategies differ. In China and Vietnam, low resource rents have nurtured developmental political
conditions and encouraged efficient resource use, which initially promoted agriculture as a dynamic market sector, capable
of absorbing labour from the lagging state sector. In contrast, the scale and ease of natural resource rent extraction in the
Central Asian countries has consolidated authoritarian governments that postpone reform. Despite high energy rents,
Uzbekistan and Turkmenistan still extract agricultural rents in ways that repress farm incentives, perpetuate environmental
degradation and liquidate irrigation assets. Uzbekistan uses its rents to subsidize a manufacturing sector, that is neither
dynamic nor competitive. As its dynamic sector, Turkmenistan promotes natural gas exports that depend on volatile markets.
Resource-driven development models suggest that reform is required in both countries to avert a growth collapse.
Turkmenistan’s large energy rent-stream may postpone a collapse for some years, but Uzbekistan’s position is already
precarious: it has run down its rural infrastructure and accumulated sizeable foreign debts and will require external
assistance to recover from a growth collapse. Such assistance should be made conditional on accelerated economic and
political reform.
Keywords: Transition reform; Initial conditions; Aral Basin.

1. Introduction 2000). Gradual reform is sometimes termed ‘dual track’

Uzbekistan and Turkmenistan claim to pursue gradual re-
form to a market economy, but this article queries that
claim, drawing upon inter-country comparison and resource-
based development models. The optimal speed of transition
reform remains controversial. The international financial
institutions (IFIs) favour rapid reform, because swift and
comprehensive reform limits the absolute decline in both
GDP and government revenue (de Melo et al., 1996). It
also reduces the risk that ‘reform fatigue’ will stall the
reform process and create opportunities for anti-social rent-
seeking by a privileged élite. Research by Åslund et al.
(1996), Fischer et al. (1996), Havrylyshyn et al. (1998) and
Berg et al. (1999) supports the advantageousness of early
and rapid reform.
Nevertheless, some recent analyses argue that gradual
reform is superior to rapid reform (Roland, 2000; Popov,
The author is Professor of Economic Geography, Lancaster University,
Lancaster, UK. E-mail: r.auty@lancaster.ac.uk.
© 2003 United Nations. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
reform, because it nurtures a dynamic market sector, the
expansion of which extracts surplus labour from the lag-
ging state sector in an orderly and incremental manner.
This process allows the national economy to expand out of
the plan without threatening participants within the plan
system (Lau et al., 2000). A principal attraction of gradual
reform is that it lowers political risk by limiting both
the initial post-plan loss of GDP and the social cost of
adjustment.
This article argues that variations in transition trajector-
ies lie deeper than a preference for rapid or gradual reform.
This is because the choice of reform strategy is constrained
by initial conditions, notably history and geography (de
Melo et al., 2001). The Central Asian countries faced less
propitious conditions for reform than the successful gradu-
ally reforming East Asian countries because their eco-
nomies were more distorted by central planning and they
are more remote from large markets. Natural resources also
play a role, which has been relatively neglected. This article
argues that the governments of resource-rich Uzbekistan
and Turkmenistan have used their unusually large natural

256 Richard Auty / Natural Resources Forum 27 (2003) 255–266
resource rents to consolidate non-developmental political
conditions and postpone economic reform. The article
relies on resource-driven development models to show that
the reform strategies of Uzbekistan and Turkmenistan are
not sustainable.
The article is structured as follows. The next section,
Section 2, analyses how initial conditions constrain choice
of reform strategy and uses resource-driven development
models to explain how natural resources affect the type of
political conditions that emerge, and a state’s development
trajectory in important ways. Section 3 estimates the scale
of natural resource rent extracted by the governments of
Turkmenistan and Uzbekistan. Section 4 demonstrates the
non-viable deployment of rent that funds their ‘gradual’
reform strategies. The policy implications are set out in
Section 5.
2. How initial conditions constrain reform strategy
2.1. Modelling initial conditions: Consequences of
history and geography
The initial conditions model conceptualizes history as the
length of exposure to central planning (de Melo et al., 2001).
Long exposure represses market-friendly institutions, height-
ens economic distortion and requires deeper economic
reform, because few centrally planned countries had a
comparative advantage in heavy industry and large-scale
agriculture, which central planning favoured (EBRD, 1999).
De Melo et al. (2001) confirm that the longer the exposure
to central planning, the greater the macro distortion, the
higher the degree of over-industrialization and the stronger
the probability that reform will be blocked by rent-seeking
groups and the inertia caused by obsolete capital stock.
Turning to geography, two factors are at work, namely
relative location and natural resources. Proximity to a large
dynamic market economy that is democratic encourages
trade and institutional spillovers that positively affect eco-
nomic and political reform (Kopstein and Reilly, 2000).
The role of natural resources has been neglected, how-
ever, and therefore warrants fuller discussion here. Natural
resources affect lower-income countries, because these rely
heavily on the primary sector. Natural resources are less
significant at the higher income levels of the Central and
East European (CEE) countries, because here the primary
sector generates a much smaller share of GDP. The initial
preoccupation of the transition literature with the CEE coun-
tries may be responsible for this neglect.
Natural resource rents are the surplus revenue from
resource-based activity after deducting all costs of pro-
duction, including a risk-related return on investment. An
efficient producer does not require such rents to remain in
business, and natural resource rents can thus be viewed
as a gift from nature that can be taxed away by the gov-
ernment. The size and distribution of the rents affect the
14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
nature of the domestic political conditions and the develop-
ment trajectory of the economy in important ways (Auty
and Gelb, 2001). First, with regard to the domestic political
conditions, the government in a resource-rich country can
satisfy its financial needs not only by encouraging invest-
ment in wealth generation, but also by capturing the nat-
ural resource rent. This diverts effort away from economic
policies that raise output through the provision of public
goods and incentives for efficient investment, and into the
political process of rent extraction. Resource-rich countries
are therefore less likely than resource-poor countries to
engender development-furthering political conditions.
A developmental political state is defined as one that has
sufficient autonomy to pursue a coherent economic policy
and the aim of raising social welfare. Table 1 presents a
typology of political states based on the autonomy and aims
of the state. It identifies two basic variants of the develop-
mental political state, namely the benevolent autonomous
state and the consensual democracy. The former is strongly
associated with the successful resource-poor developing
market-economies of East Asia, the latter with resource-
poor Mauritius and the handful of successful resource-rich
developing market-economies, such as Botswana, Malaysia
and post-Pinochet Chile.
With less distraction from natural resource rent, the
governments of resource-poor countries have a stronger
interest in providing public goods and sustaining efficiency
incentives to boost economic growth. For example, if the
remuneration of government leaders is 1% of total output,
the leadership maximizes its remuneration by maximizing
national output. Consequently, resource-poor countries tend
to engender developmental political conditions, in which
the governments are more likely to align their interests
with those of the majority.
The second impact of natural resources is on the devel-
opment trajectory. Resource-driven development models
show that a shorter-lived dependence on export of primary
products makes it necessary for resource-poor countries to
embark on competitive industrialization at a relatively low
per capita income in order to earn the foreign exchange
needed to import those goods that the country cannot
produce. Such early industry tends to be labour-intensive,
and the resulting development trajectory of competitive
industrialization accumulates all forms of capital (pro-
duced, social and institutional) faster than that of resource-
rich countries, which remain dependent on primary exports
for longer. Moreover, low rents reduce the time period
over which flawed policies can be sustained, so that the
governments of resource-poor countries are less likely to
distort the economy and deflect it from its underlying
competitive advantage. For example, they experiment less
with closed-trade policies than resource-rich countries,
and where they do, they abandon such policies earlier
(personal communication from A. M. Warner). Overall,
resource paucity strengthens incentives to use scarce eco-
nomic resources efficiently so that, unlike the experience of
 14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Richard Auty / Natural Resources Forum 27 (2003) 255–266 257

Table 1. Typology of political states

Autonomy and type Aims Basic type Markets role Country examples

Autonomous predator Maximize rent siphoning Military élite Soft constraint Nigeria 1966–1979 + 1983–1999,
Ghana 1970–1983
Central planning Soft constraint Algeria, Turkmenistan, USSR

Autonomous benevolent Maximize social welfare Growth with equity Hard constraint Chile 1975–89, Hong Kong, Korea,
Taiwan
Paternalistic monarchy Relaxed constraint Brunei, Kuwait, Saudi Arabia, UAE

Factional oligarchy Maximize rent siphoning Landed/indust. captures policy Soft constraint Argentina, Brazil, Mexico, Bolivia
Public officials capture policy Soft constraint Azerbaijan, India, Kazakhstan,
Russia, Uzbekistan
Ethnic alliance captures policy Soft constraint Kenya, Sudan, pre-1993 South Africa

Factional democracy Maximize social welfare Consensual: growth + equity Hard constraint Malaysia, Botswana
Polarized: equity > growth Relaxed constraint Costa Rica, Sri Lanka

Source: Auty and Gelb (2001).

many resource-rich countries, as the rate of investment rises
with rising per capita income, the efficiency of investment
remains high and rapid GDP growth is sustained (Auty,
2001a).
In contrast, resource-rich countries depend on export of
primary products for longer and tend to accumulate all forms
of capital more slowly. If the rents are deployed by a non-
developmental political state, as has usually been the case
(Auty, 2001a), the economy is cumulatively distorted. Polit-
ical pressure to disperse the resource rents encourages gov-
ernments to force industrialization and to over-expand the
bureaucracy. This postpones competitive industrialization
and expands a subsidized sector, which relies on primary
sector rent. The parasitic sector’s growth eventually out-
strips the natural resource rents, but it also creates urban
vested interests that benefit from rent-seeking, and block
reform. Governments therefore expand subsidies by extract-
ing the return to capital in the politically weak primary
sector, as well as the rent, thus eroding primary sector viabil-
ity. The staple trap model describes this process whereby
an expanding parasitic sector, that depends on subsidies
from a weakening primary sector, depresses overall capital
efficiency and results in a growth collapse, from which
recovery is protracted (Auty and Gelb, 2001). This article
argues that the economies of Uzbekistan and Turkmenistan
are following the staple trap trajectory, which — without
reform — will lead to a growth collapse.
To summarize this discussion of initial conditions:
resource abundance is likely to ease pressure for economic
and political reform, encourage the emergence of a non-
developmental political state and perpetuate the cumulative
misallocation of resources. If combined with long exposure
to central planning and remoteness from markets, resource
abundance further strengthens obstacles to reform.
2.2 Central Asia compared: Explaining regional
differences in transition reform
There are two sets of successfully reforming countries,
namely the rapidly reforming CEE countries and the gradu-
ally reforming East Asian countries. The successful coun-
tries therefore lie at the extremes not only of the pace
of reform but also of per capita income. An important
shared characteristic is, however, a relatively low degree
of macro-economic distortion (Table 2, line 2). Although
the rapidly reforming CEE countries achieved high levels
of over-industrialization under central planning, their macro-
economy was far less distorted than that of the former
Soviet Union (FSU) countries. In addition, geographical
proximity to the EU attracted foreign direct investment (FDI)
aimed at supplying the EU market, which hastened eco-
nomic restructuring. The prospect of EU membership also
spurred political reform. Finally, the relatively high per
capita income of most CEE countries and consequent smaller
size of their primary sectors has limited the impact of
natural resource rents.
The successful gradual reformers of East Asia comprise
China, Laos and Vietnam. All three lack sizeable natural
resource rents and their economic policies have tended to
be development oriented. These states took advantage of
their proximity to the dynamic East Asian market to open
their economies to trade and foreign investment — if only,
in the case of China, in the more accessible coastal regions.
Finally, all three countries were exposed to central plan-
ning for far shorter periods than either the FSU or the
CEE countries (Table 2, line 1). The resulting low level of
distortion left the agricultural sector dominant, rather than
industry. Agriculture still provided over 70% of employ-
ment, twice that of the low-income FSU countries of the
 14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
258 Richard Auty / Natural Resources Forum 27 (2003) 255–266

Table 2. Four geographical models of transition reform

Pre-condition/ Index CEEa rapid NCIS + SEEb Caspian Basin faltering reform East Asiae
outcome reform Stalled reform Gradual reform
Energy-richc Non-minerald

History Years central plan 45 59 71 71 34

Macro distortion (1 high) −0.70 0.29 1.12 0.92 −0.96
Over-industrialized (% GDP) 10.2 11.7 −0.3 8.0 −2.0
Farm employment (% all) 14 26 34 30 34
PCGNP (1989 US$ at PPP) 7,495 5,592 4,180 4,328 950
Geography Per capita cropland (ha) 0.46 0.59 0.73 0.21 0.18
Political statef CD PD APS PD ABS
Near NW Europe (1 near) 1 2 4 3 5
Institution quality (10 high) 5.0 −3.6 −8.8 −7.4 −5.8
Social cohesion (3 strong) 2.88 0.54 0.62 1.86 n.a.
Reform outcomes Reform index (4.0 complete) 3.3 2.5 2.1 2.5 2.1
1989/1999 GDP ratio 0.90 0.87 0.67 0.42 1.78
1992/1998 Govt. expend. Ratio 1.04 0.74 0.57 0.49 0.93
Mid-1990s Income gini 0.31 0.37 0.51 0.49 0.38
True saving (% GDP) 10.9 1.4 −12.6 5.0 10.8

Source: Auty (2001b).

Notes:
a
Croatia, Czech Rep., Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Rep., Slovenia
b
Belarus, Bulgaria, Moldova, Romania, Russia, Ukraine
c
Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan
d
Armenia, Georgia, Kyrgyzstan, Tajikistan
e
China and Vietnam
f
CD consensual democracy; PD polarized democracy; ABS autonomous benevolent state; APS autonomous predatory state.

Caucasus and Central Asian (CCA) region and five times
the CEE countries (Table 2, line 4). A dominant agricul-
tural sector can promote rapid structural change, despite
having a slower growth rate than the manufacturing sector
(Mellor, 1995). It provides foreign exchange, tax revenue,
food, labour and production inputs as well as markets for
manufactured goods and services as long as government
policy does not blunt incentives. Simple reforms in China
and Vietnam relaxed erstwhile repressed incentives and
triggered robust agricultural growth that was increasingly
market oriented. Agriculture proved less dynamic in Laos,
due to lower rural investment by Laotian central planners,
but FDI created a dynamic market sector in export-oriented
manufacturing (Bourdet, 2000).
Reform stalled in the FSU countries that had been
heavily distorted by central planning (Table 2, line 2).
Moreover, their agriculture proved less flexible because it
was over-extended into marginal lands (Pomfret, 2000) and
relied on inputs of water, chemicals and machinery that
were difficult to sustain (World Bank, 2003a). In addition,
Central Asia is not attractive to FDI in export manufactur-
ing because it is landlocked and remote from large mar-
kets. Finally, the resource-abundant Central Asian countries
have nurtured non-developmental politicies.
Esanov et al. (2001) show that the governments of oil-
rich Azerbaijan and Kazakhstan initially espoused reform
in order to secure IFI assistance and thereby attract FDI to
refurbish their energy sectors. Their appetite for reform
cooled once the MNCs had made large investments in oil
extraction that sharply boosted their oil rent. Jones Luong
and Weinthal (2001) argue that the governments of resource-
rich Uzbekistan and Turkmenistan exhibited even less
enthusiasm for reform (Table 3), because they were less in
need of FDI to capture their resource rents. This reduced
their dependence on IFIs, in contrast to the region’s
resource-poor countries. The latter lacked resource rents
with which to adjust to the abrupt loss of FSU markets and
subsidies and therefore espoused reform faster in exchange
for conditional IFI assistance. Attention now turns to an
evaluation of the rent extraction strategies of Uzbekistan
and Turkmenistan.
3. Capture of the natural resource rents
3.1. The large potential energy rents
The energy rents shown in Table 4 are potential rents, since
they are not automatically realised, because conflicting
objectives in government policy may result in either direct
leakage — subsidized prices to consumers, for example —
or indirect leakage — above market-clearing wages and
profits to workers and firms within the energy sector.
Table 5 presents EBRD estimates of the scale and allo-
cation of the potential energy rents in the year 2000. It con-
firms the very large scale of the prospective energy rents
 14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Richard Auty / Natural Resources Forum 27 (2003) 255–266 259

Table 3. European Bank for Reconstruction and Development (EBRD) transition indicators 1999

Country/group Privatization Govt + firm Price Trade Competition Financial Overall

restructure liberalization liberalization policy reform index

Mid income
Central + E. Europe 3.9 2.9 3.1 4.3 2.7 3.0 3.3
Northern CIS + SEE 2.9 1.8 2.7 3.2 2.1 2.0 2.5
Russia 3.7 1.7 2.7 3.3 2.3 1.7 2.5
Lower income
East Asia 2.0 2.1 2.9 2.5 1.8 1.5 2.1
Resource-poor Caspian 3.2 1.9 3.0 3.7 1.8 1.7 2.5
Resource-rich Caspian 2.6 1.9 2.5 2.1 1.5 1.7 2.1
Turkmenistan 1.9 1.7 2.0 1.0 1.0 1.0 1.4
Uzbekistan 2.9 2.0 2.0 1.0 2.0 1.9 2.1

Source: IMF (2000).

Note: The privatization and financial reform indices are collapsed from two readings into one, but the aggregate index is derived from equally weighting all
the original eight readings.

Table 4. Hydrocarbon production and mineral rent, Uzbekistan and Turkmenistan 1990–2000

Country/Group 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Turkmenistan
Oil (mbpd) 120 115 110 90 85 85 90 110 130 145 150
Gas (mcm3) 81.9 78.6 56.1 60.9 33.3 30.1 32.8 16.1 12.4 21.3 43.8
Rent/GDP (%)a n.a. n.a. n.a. n.a. 63.8 39.5 53.8 33.6 32.9 44.0 n.a.
Uzbekistan
Oil (mbpd) 70 70 80 95 125 170 175 180 190 190.0 175
Gas (mcm3) 38.1 39.1 39.9 42.0 44.0 45.3 45.7 47.8 51.1 51.9 52.2
Rent/GDP (%)a n.a. 1.3 15.3 13.6 12.5 17.0 19.6 21.0 13.7 16.6 n.a.

Source: BP (2001), except a: World Bank (2001).

Table 5. Estimated potential energy rents, selected Caspian Basin for Turkmenistan, relative to GDP. Although Uzbek rent
countries 2000 (% GDP) is half that of Turkmenistan, it is higher than Indonesian
Export rent Domestic Total Domestic
oil rents during the 1974–1978 and 1979–1981 oil booms.
producer rent rent consumer Table 5 shows that the Government of Turkmenistan
subsidies allows a sizeable fraction of the rent to leak to consumers,
both to the general public and to the SOEs, by way of fuel
Azerbaijan 31.2 16.8 61.4 13.4 prices set below the level of world prices. This reflects
Kazakhstan 20.2 9.8 33.6 3.6
Turkmenistan 43.0 −5.2 65.3 27.5
government policy to avoid social unrest by subsidizing
Uzbekistan 6.3 26.2 36.4 3.9 gas, electricity and water until FDI expands the natural gas
rent. Moreover, some energy exports were paid for with
Source: Esanov et al. (2001). bartered goods of inferior quality, so that the actual export
Notes: Export rents = actual export revenues − transport costs rents accruing to the government would be correspond-
− production costs.
Total rents = total output × export price − transport cost
ingly lower than the estimates given in Table 5. In contrast,
− production cost. the Uzbek Government made greater progress in reduc-
Domestic consumer subsidies = domestic consumption × (domestic price ing domestic energy price distortion and much of the rent
− import price). accrues to the energy SOEs, and can therefore be taxed
Domestic producer rent = total rent − export rent away by the government.
− domestic consumer subsidies.
The EBRD rent estimates are larger than the World Bank estimates in
Table 4 because the EBRD assumes global export prices for all 3.2. Squeezing rents, and more, from agriculture
output, whereas the World Bank notes the current impracticality of
attaining such prices and therefore uses lower opportunity costs in Governments can prudently capture rents from agriculture,
making its rent calculations. provided farmers are efficient enough to generate surplus
 14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
260 Richard Auty / Natural Resources Forum 27 (2003) 255–266

revenue after covering all costs, including a risk-related Table 6. Implicit taxes and subsidies on foreign trade, Uzbekistan
return on investment at world prices. However, ad hoc state 1997–1999 (% GDP)
intervention through direct taxation, price controls on farm 1997 1998 1999
inputs and outputs and manipulation of the exchange rate
and interest rates may cause government imposts to exceed Foreign exchange inflow 6.0 10.7 16.2
the rent and absorb some of the returns to labour and cap- Centralized exports 5.2 8.1 11.8
ital. This depresses agricultural incentives and output. For Cotton 3.4 5.4 6.7
Gold 1.8 2.7 5.2
example, Krueger (1993) reports that revenue extraction Other exports 0.9 2.6 5.4
from resource-intensive sectors was especially high in sub-
Saharan Africa during the 1960s and 1970s: direct agricul- Foreign exchange outflow 8.5 10.4 15.1
tural taxation averaged 25% of revenues, some four times Centralized imports 7.0 6.3 7.1
that of Latin America and ten times Asian rates. The high Other imports 1.5 4.1 8.0
figure for sub-Saharan Africa doubles when indirect taxes, Source: Rosenberg and Zeeuw (2000).
such as overvalued exchange rates are added.
Despite large energy rents, the governments of both
Turkmenistan and Uzbekistan extract sizeable rents from officials nor economic agents are fully aware of the distor-
agriculture with little regard for the impact on farm incent- tions. Second, the government is locked into transferring
ives. Table 3 shows that these two countries lag the East revenue from exporters to importers — whereas direct taxes
Asian gradual reformers in promoting trade liberalization would confer flexibility in the use of revenues. Third, the
and price reform. They continue to control interest rates administration of the exchange rate system is cumber-
and the exchange rate, as well as the price of key export some and also encourages government corruption and
commodities. Although world prices for cotton and wheat rent-seeking. Finally, the system introduces an element of
were relatively stable during the years 1993–1999, the prices uncertainty into the availability of foreign exchange, which
paid to domestic producers in Turkmenistan for wheat and raises investor risk still further.
for export cotton declined by 25%, while those for raw In summary, despite sizeable potential energy rents, both
cotton dropped by two-thirds. Pastor and van Rooden (2000) governments extract large rents from agriculture by ineffi-
estimate that 15% of GDP was transferred in 1999 from cient means. The next section examines how they allocate
Turkmen agriculture due to the net effect of the multiple these rents, and the consequences for their development
exchange rate system, procurement pricing and farm sub- trajectory.
sidies. Meanwhile, real prices of non-agricultural products
rose by 25%, indicating a sharp deterioration in real in-
comes within the agricultural sector, in which a majority 4. Natural resource rent deployment: Departures
of the workforce — and therefore of domestic consumers from the dual track strategy
— earn a living.
The Uzbek Government introduced a multiple exchange Transition reform needs to shift resources away from
rate system in 1996 and also maintained state procurement over-expanded heavy industry and mechanized agriculture
quotas and prices along with subsidies for import substitu- into erstwhile repressed sectors, such as market services,
tion industries. Tighter restrictions on the official supply of consumer goods and competitive agriculture. Rapid reform
foreign exchange caused the premium on the curb market seeks a fast switch, whereas gradual reform accomplishes
rate of exchange to jump from 100% in 1997 to 400% the shift incrementally by stimulating a dynamic market
by 1999. At that time, Rosenberg and de Zeeuw (2000) sector to absorb erstwhile inefficiently allocated labour
estimated that the scale of transfers attributable to the from the lagging state sector. China offers an example of
exchange rate regime had reached 56% of revenue on cen- effective gradual reform that the Central Asian countries
tralized exports, such as cotton, and 21% on other exports. can be compared to.
Meanwhile, centralized imports, such as capital equipment,
were subsidized by 56% of their cost and other imports by 4.1. Chinese gradual reform
44%. Table 6 traces the sharp increase in transfers, which
reached 6.7% of GDP from cotton, 5.2% from gold and The crucial aspect of Chinese gradual reform is the rapid
16.2% from all exports combined. Imports received slightly creation of a dynamic market sector to steadily dilute the
less than this amount in subsidies because the central bank deadweight burden of the plan sector on the total economy.
withheld some foreign exchange. Much of the initial Chinese reform effort during the years
Transfers from agriculture to other sectors on such a 1978–1984 focused on the dominant rural sector with sub-
scale could have been achieved by direct fiscal means, rather stantial rises in prices, both for crops procured under the
than through the exchange rate, which is an inferior method plan and above-quota market sales. Land and output quotas
for four reasons (Rosenberg and Zeeuw, 2000). First, the were contracted out to family units, with improved incent-
system lacks transparency, so that neither government ives for long-term investment. The incentives engendered

Richard Auty / Natural Resources Forum 27 (2003) 255–266
more effective use of the infrastructure built under central
planning and led to swift increases in agricultural produc-
tion. Farm output outstripped demand by 1984, so that
market prices for food fell. This encouraged the transfer of
surplus labour into competitive non-farm activity within
township and village enterprises (TVEs) run by local
authorities (Li et al., 2000).
Reform of the lagging state-owned industrial sector
proceeded more slowly, beginning in the mid-1980s with
experiments with FDI in four export zones and a partial
shift to market pricing. Nevertheless, during 1984–1989,
market prices expanded to account for 70% of retail sales
(Gelb et al., 1993). Within the plan sector, a contract system
was established in 1987 for SOE managers that set targets
for profit remittance (as a form of taxation), productivity
and sometimes innovation. Meanwhile, a depreciation of
the real exchange rate (by more than 50% against the dollar)
through the late 1980s triggered an expansion in manu-
factured exports.
However, China’s gradual reform remains incomplete a
generation after its inception. Reform remains threatened
by the principal weakness of gradual reform, namely de-
layed macro-economic stabilization. Basically, the decen-
tralization of revenue collection to local authorities, which
accompanied the contract system, cut central government
revenues, even as loosened budget constraints on SOEs
imposed a mounting burden of transfers on the central gov-
ernment. The resulting fiscal deficits triggered inflation that
halted reform during 1989–1991. When reform resumed,
greater attention was paid to building social safety nets to
facilitate redeployment of surplus SOE labour, a process
that remains far from complete.
4.2. Diminished incentives for efficiency in the ‘dynamic’
agricultural sector
Instead of improving rural incentives, as Chinese reforms
did, Uzbek reforms repressed them, because the central
government came to depend heavily on farm revenue, while
local élites retained more control over production than did
their counterparts in China. By the late 1990s, the Uzbek
Government secured almost one-third of its revenue from
excise duties, possibly one-half of this from cotton. Yet
Uzbek farmers cannot adjust to price repression by grow-
ing crops with a higher return because of state quotas and
price controls. The government allocates almost three-
quarters of the cultivable land to cotton and wheat, and sets
optimistic state production targets that ensure that more
than two-thirds of output is sold at state prices (IMF, 2000).
The squeeze is reflected in a fall in rural wages from 15%
above the national average to 33% below the national aver-
age during the 1990s (Pomfret and Anderson, 1997).
Agricultural incentives were also repressed in Turk-
menistan as the government pursued food self-sufficiency
in response to disrupted shipping routes and shortages of
foreign exchange. Efforts to transform state farms and
14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
261
Table 7. Alternative value added and inputs by crop, Turkmenistan
1999 (1,000 manat/ha)
Wheat Cotton Sun-dried Raisins
Tomatoes
Revenuea 2.954 5.304 34.320 13.585
Raw material + inputs 1.040 0.962 4.342 0.840
Value added 1.914 4.342 29.978 12.745
Value added/ 1,000 1,840 4,514 6,904 15,173
manats inputs
Source: Pastor and van Rooden (2000).
Note: aBased on world prices at 5,200 manat/US$, after deducting costs
of transport.
collectives into peasant associations failed to provide suffi-
cient incentive to raise efficiency. As wheat cultivation ex-
panded three-fold onto marginal lands, the labour required
per tonne increased, but falling wages reduced the labour
input and fertilizer applications fell. Grain yields therefore
halved to only 0.9 tonnes per hectare. Cotton production
fell by one-third in 1993–1996 because of pests; shortages
of labour, fertilizer and water; and state procurement prices
that left farmers with 15% of the world price (IMF, 1997).
Elsewhere, state orders to increase the domestic cattle herd
led to beef shortages, as farmers reduced the annual cull.
The inflexibility of Turkmen agricultural policy, like that
of Uzbekistan, imposes substantial opportunity costs on
farmers. Pastor and van Rooden (2000) estimate that re-
turns from growing sun-dried tomatoes could be 15 to 24
times higher than returns for growing wheat under the state
procurement system (Table 7). The ratio for dried fruit
(raisins) is seven times higher than that for wheat and 4.5
times higher than for cotton grown under the state procure-
ment system. In addition, sun-dried tomatoes and raisins
are more labour-intensive and would employ a higher frac-
tion of the workforce. Pastor and van Rooden (2000) calcu-
late that if one-quarter of the cultivable land was devoted
to production of these two commodities, exports would be
US$1.4 billion compared with barely one-fifth that level
for the same land producing export crops of wheat and
cotton. The difference would be sufficient to service the
foreign debt accumulated since independence. In addition,
public finances would improve by a net 13% of GDP, due
to higher profit taxes and lower subsidies that, respectively,
would generate and conserve around 6% of GDP each.
Overall, neither the Uzbek nor the Turkmen Government
have created a dynamic market sector out of agriculture,
quite the reverse.
4.3. Alternatives to agriculture as dynamic sectors
The Uzbek Government encourages manufacturing as
its dynamic sector. Certainly, Uzbekistan has a potential
comparative advantage in manufacturing, being the largest

262 Richard Auty / Natural Resources Forum 27 (2003) 255–266
national market within the region and enjoying a central
location relative to neighbouring markets. Moreover, as its
endowment of energy resources is modest compared to that
of Kazakhstan and Turkmenistan, there is less risk that
Dutch disease effects will marginalize industrial investment.
Yet, Zettelmeyer (1998) finds that the Uzbek economy’s
mild transition recession occurred despite the country’s in-
dustrial policy. His regression model shows that favourable
world commodity prices (cotton exports, in particular, along
with gold) sustained government finances and limited GDP
decline. Zettelmeyer (1998) concludes that windfall cotton
revenues combined with energy self-sufficiency to ease
Uzbek adjustment: industrial investment is a weak explan-
atory factor.
The Achilles’ heel of industrial policy is policy capture
(Auty, 1995) and this has occurred in Uzbekistan. The pub-
lic sector dominates industrial investment and most SOEs
have been captured by their managers, who secure access
to low-interest loans and enjoy soft budgetary constraints
and little competition. The SOEs absorbed three-fifths of
national investment in 1996, yet their products are of low
quality and difficult to sell (EIU, 1996). Most factories run
well below viable capacity levels and many FDI plants,
attracted by government incentives, have shut down. Con-
sistent with the staple trap model, the protected manufac-
turing sector requires subsidies that the repressed primary
sector struggles to meet. This misallocation of capital leads
to a staple trap: it depresses the efficiency of investment,
lowers the economic growth rate and will cause a growth
collapse, from which recovery is likely to be protracted
(Auty, 2001a).
The growth in public debt reinforces the non-sustainability
of Uzbekistan’s development strategy. Using the indicative
exchange rate (which combines the official, commercial
and curb market rates), the share of public debt in GDP
quadrupled to 63% during 1996–2001, while debt service
tripled to 27% of exports. These ratios are already above
manageable levels and yet, in order to prevent debt service
from spiralling out of control, an annual GDP growth rate
of at least 6% is required (World Bank, 2003a) — a level
50% above the recent indifferent economic growth rate,
which official data probably overstate.
The Turkmenistan Government regards natural gas as
its dynamic market sector. It seeks to ease import com-
pression, lift investment and raise incomes by expanding
natural gas exports. The strategy originally called for
natural gas production to quadruple to 230 billion m3 by
the year 2010 and for oil production to reach 1.5 million
barrels per day (Sagers, 1994). Cotton production was also
to expand by one-third with emphasis on exporting manu-
factured cotton goods. The government hoped legal reform
would encourage FDI. The strategy met with some initial
success. However, by the late-1990s, both energy and agri-
culture had accumulated debts of US$0.8 billion, around
22% of GDP in each case (Pastor and van Rooden, 2000).
Meanwhile, inadequate sterilization of the inflow of FDI
14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Table 8. IEA hydrocarbon production projections 2000–2010
Turkmen Gas Uzbek Gas Turkmen Oil Uzbek Oil
(b m3) (b m3) (000 bpd) (000 bpd)
2000 19.2 59.6 160 210
2010 49.4 62.5 510 200
Source: Fueg (2000).
caused the real exchange rate to appreciate three-fold against
Armenia, Azerbaijan and Kazakhstan between 1995 and
1999, and by more against other CCA countries and Russia.
This discourages competitive agriculture and manufactur-
ing and thereby limits diversification away from excessive
dependence on gas.
The gas-based development strategy of Turkmenistan is
also weakened by the country’s remoteness from major
markets in Western Europe and South Asia. Transport costs
for natural gas per unit of heat value are much higher than
those of oil (Stauffer, 1975). Transport costs absorb two-
thirds of Turkmen gas revenue and gas extraction costs
take one-sixth, so the export rent is one-sixth of total rev-
enue. In addition, the gas pipelines cross several countries,
increasing the risk of disruption. Worse, far from expand-
ing, Turkmen gas production fell by three-quarters between
1990 and 1998 because it was excluded from Russian
pipelines and traditional export markets collapsed. Table 8
indicates that gas will struggle to regain its pre-transition
output by 2010, let alone rise four-fold.
4.4. Structural change, welfare and sustainability
Rapid reform in the CEE countries cut employment in
agriculture and industry and expanded services, especially
market services (Table 9). The adjustment was harsher for
the CCA countries as a group: industrial employment halved
and was mainly offset by expanding farm employment along
with some growth in market services. Labour reallocation
was less drastic for Uzbekistan and Turkmenistan, where
initial economic distortion was small vis-à-vis market
economies of a similar size and level of development
(Table 10). Yet labour remains inefficiently deployed in an
over-expanded government sector and non-viable manufac-
turing that depend on rents from the energy and agricul-
tural sectors, neither of which maintains its capital stock.
The resilient GDP rebound of the East Asian gradual
reformers contrasts with those of the CEE countries and
FSU (Table 11). For the reasons cited earlier, Uzbekistan
was more successful than most in limiting its GDP decline
— to slightly less than one-fifth. Table 12 shows that the
Uzbek Government also prevented revenue from dropping
below 30% of GDP by a skilful tax reform (de Melo et al.,
2001; Pomfret, 2000). Moreover, public expenditure was
targeted at health and education and the most vulnerable
were cushioned from hardship (Pomfret and Anderson,
1997). Yet the Uzbek GDP rebound is probably overstated
 14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Richard Auty / Natural Resources Forum 27 (2003) 255–266 263

Table 9. Change in employment composition, by sector 1990–1999 (% total)

Agriculture Industry Non-market services Market services

Mid income
Central + East Europe 16 → 10 42 → 35 20 → 24 22 → 30
Northern CIS + SEE 23 → 29 41 → 27 20 → 21 15 → 20
Russia 13 → 12 42 → 29 26 → 32 17 → 27
Low income
East Asia 60 → 57 16 → 14 na → na na →na
Caspian Region 34 → 46 27 → 13 22 → 20 13 → 18
Resource-Poor 30 → 54 30 → 13 25 → 20 13 → 13
Mineral-Rich 38 → 38 24 → 12 19 → 20 14 → 23
Turkmenistan 42 → 47 21 → 19 23 → 19 13 → 13
Uzbekistan 40 → 41 25 → 21 24 → 24 12 → 14

Source: EBRD (2000). Except East Asia: World Bank (2001) and IMF (2000).

Table 10. Structural change 1989–1999 (actual + expected employment share)

Sector 1989 Norm 1989 Actual Departure from 1999 Norm 1999 Actual Departure from
norm in 1989 norm in 1999

Uzbekistan PCI (US$ 1995) 3,300 2,700

Agriculture 39.7 39.9 +0.2 44.7 41.3 −3.4
Industry 21.7 24.5 +2.8 19.7 20.8 +1.1
Distortion +3.0 −2.3
Turkmenistan (US$ 1995) 3,000 1,900
Agriculture 41.2 41.9 +0.7 51.7 47.4 −4.3
Industry 21.1 20.8 −0.3 17.8 18.5 +0.7
Distortion +0.4 −3.4

Source: Raiser et al. (2001).

Table 11. Reform and transition growth trajectories, by country and regional group

Country group First phase Second phase Cumulative Year of % annual GDP 2001 Earnings Per capita
reform reform GDP decline lowest GDP growth compared to Gini 2000 GDP 2000
index index to low (%) GDP from low 1989 GDP (%) ($PPP)

Mid income
CEE + BR 3.9 3.3 28.9 1993 3.4 113 0.330 8,345
Northern CIS 3.1 2.2 53.0 1997 4.6 60 0.380 4,750
Low income
East Asia na na na na 6.2 160 0.370 2,132
CCA Region 3.1 2.1 55.1 1995 6.4 73 0.470 2,910
Resource-Poor 3.6 2.1 66.0 1995 5.6 60 0.485 2,223
Resource-Rich 2.5 2.0 44.2 1996 7.2 87 0.436 3,598
Turkmenistan 1.0 1.7 59.5 1997 12.8 96 0.365 3,800
Uzbekistan 2.2 2.0 14.4 1995 3.4 105 n.a. 2,360

Source: EBRD (2002); Fischer et al. (2000).

Note: First phase reform includes price liberalization, trade and foreign exchange liberalization and small-scale privatization. Second phase reform involves
large-scale privatization, governance and enterprise restructuring, competition policy, infrastructure reforms, banking and interest rate liberalization and
non-bank financial institutions. Progress is measured from 1 (minimal) to 4 (virtually complete) according to criteria described in EBRD (2002, 21).

by official figures and growth is faltering, while mean
per capita income is low, measured by purchasing parity
(Table 11, final column). Turkmen GDP is buoyed by a
rapid expansion in natural gas, but the deployment of the
rents continues to distort the economy, which is extremely
vulnerable to a negative price shock.
Neither country has escaped deterioration in income
distribution. In Turkmenistan, the gini coefficient is twice
the expected rate for a socialist country (Table 12), and
comparable to that of resource-rich developing market-
economies, in which income inequality is typically high.
Although data are not available for Uzbekistan, the fact
 14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
264 Richard Auty / Natural Resources Forum 27 (2003) 255–266

Table 12. Revenue, expenditure and fiscal compression by reform group 1992–98

Pre-condition Income inequality Government expenditure Fiscal gap 1995 Fiscal gap 1998
group (gini 1996–99) (% GDP) (% GDP) (% GDP)

1992 1995 1998

Mid income
Central + E Europe 0.31a 42.7 44.7 44.3 −2.1 −2.7
Northern CIS + SEE 0.37 50.5 41.0 37.1 −5.0 −3.1
Russia 0.49 57.9 39.6 39.5 −6.1 −8.0
Low income
East Asia 0.38 20.2 19.1 18.8 −5.2 −6.2
Resource-poor Caspian 0.49 50.1 35.3 24.4 −24.3 −8.8
Mineral-rich Caspian 0.51b 45.9 29.4 26.2 −9.4 −3.8
Turkmenistan 0.45 28.9 12.1 25.8 −1.4 −2.7
Uzbekistan n.a. 42.8 38.8 34.5 −4.2 −3.4

Sources: Tanzi and Tsibouris (2001); except column 1: World Bank (2000); and row 1: ADB (2000).
Notes:
a
Excludes Slovak Republic.
b
Excludes Azerbaijan and Uzbekistan.

that the rural population rose slightly to 61% of the total,
while farm wages declined to 33% below the national aver-
age (and barely 30% of the non-farm mean wage), suggests
a sharp jump in income inequality.
More worryingly, social welfare in both countries
depends on rents from the energy and agricultural sectors,
in which the wealth-producing assets are not adequately
maintained. Irrigation supports 100% of crop production
in Turkmenistan and 89% in Uzbekistan. The land would
support only 10–20% of the rural population if irrigation
collapsed (World Bank, 2003b). The decline set in under
central planning, but the agencies responsible for maintain-
ing the waterways were subsequently grossly underfunded.
Yet farmers lack the capital and institutional resources to
arrest the system’s decline because, as a result of govern-
ment policy, most farms are loss-making cooperatives that
have accumulated wage arrears. The World Bank (2003b)
estimates that Uzbekistan needs to invest 2.5% of GDP
annually for 15 years just to rehabilitate the nine-tenths of
the waterway network that may be potentially viable.
Such investment takes no account of the need to finance
measures to arrest environmental degradation within the
region and to compensate those whose health has been dam-
aged by it. The contraction of the Aral Sea has caused tens
of billions of dollars of damage to ecosystems, health and
livelihoods in the downstream areas of the Amudarya and
Syrdarya. It is estimated that half the water never reaches
the fields and that rates of application are 30–50% above
those of South Asia, a region not renowned for efficient
water use. In addition, the deterioration of drainage sys-
tems throughout the network raises the water table, causing
water-logging that inflicts widespread damage through
salination, contamination of water supplies and the corro-
sion of infrastructure such as roads, houses and schools.
Some 20,000 hectares of cropland are estimated to be lost
annually in Uzbekistan, depressing crop yields by 30%,
implying losses in crop revenues of US$1.8 billion annu-
ally (World Bank, 2003b).
The World Bank (2003b) concludes that most of the
irrigation system is viable, and that even where this is not,
it is more cost-effective, in the medium-term, to subsidize
crop production than to invest in alternative urban employ-
ment or to provide unemployment benefits to maintain
rural communities. Some contraction of the system is likely.
For example, Cai et al. (2003) estimate that to double the
existing flow into the northern Aral Sea, and thereby meet
85% of the legally required flow of 7 km3 annually,
requires an investment of US$300 million. The scheme
entails withdrawing 10% of irrigated land from cultivation,
reducing ‘thirsty’ crops (cotton and rice) from 60% to 40%
of the irrigable area and raising the share of wheat and
maize from 10% to 32%. It would raise irrigation effi-
ciency by 25% and extend drainage to 80% of the area.
Although the scheme should boost irrigation profitability
by 25%, even a US$10 per tonne tax on crops would recoup
no more than 80% of the annual investment. Moreover, water
needs to be priced in line with its cost, which the Irrigation
Research Institute estimates at US$6.33/1,000 m3, imply-
ing a seven-fold increase and a water charge of US$80 per
tonne of cotton (Spoor, 1998). Charging for environmental
damage would add significantly more to production costs.
In order to generate the revenue required to prevent a col-
lapse of the run-down irrigation system, agriculture needs
to be liberalized to improve allocative efficiency.
5. Conclusions and policy implications
This article has provided examples of the tendency of
resource-rich developing countries to rely excessively on

Richard Auty / Natural Resources Forum 27 (2003) 255–266
natural resource rents, creating macro-economic distortions
and delaying necessary economic reform. Differences in
natural resource endowment may often lead to divergent
reform strategies. This article has argued that resource-rich
Uzbekistan and Turkmenistan and resource-poor China and
Vietnam, which all claim to pursue gradual reform, are
following opposite strategies. In China and Vietnam, low
resource rents have nurtured politicies favourable to devel-
opment by encouraging efficient resource use; this policy
initially promoted agriculture as a dynamic market sector,
capable of absorbing labour from the lagging state sector.
In Uzbekistan and Turkmenistan, in contrast, the scale and
ease of natural resource rent extraction has consolidated
non-developmental governments and eased pressure for
economic reform, so that the basic wealth-generating assets
are being run into the ground.
The transition reform strategies of Uzbekistan and
Turkmenistan have failed to nurture a competitive dynamic
sector, and are not sustainable. Despite the availability of
large potential energy rents, both governments extract rents
from agriculture in ways that stifle efficiency, repress
incentives, and fail to invest enough to maintain the water-
way networks and arrest environmental degradation. Both
governments deploy the rents in ways that cumulatively
distort the economy and lead to a growth collapse, as the
staple trap model explains. Uzbekistan deploys its agricul-
tural rents to expand inefficient import substitution manu-
facturing as its dynamic sector. Turkmenistan relies heavily
on natural gas exports, which are vulnerable to price shocks.
A phase of expanding gas exports may postpone a growth
collapse in Turkmenistan, but Uzbekistan faces a more im-
mediate threat, due to a combination of faltering economic
growth and an onerous debt-service burden. In fact, a growth
collapse in the region’s most populous country might prove
a catalyst for accelerating economic and political reform
within the CCA region. A growth collapse will prompt
the Uzbek élite to re-negotiate the initial post-transition
political settlement, which basically consolidated the
political status quo (Jones Luong, 2002). Western financial
assistance will be required to maintain debt service and
invest to rehabilitate the country’s run-down productive
assets. Such assistance should be made conditional on ac-
celerating economic and political reform geared to greater
use of markets and an expansion of political accountabil-
ity, both of which will improve investment efficiency and
thereby set the country on a sustainable path of growth and
rising social welfare.
References
Asian Development Bank (ADB), 2000. Asian Development Bank 2000.
Oxford University Press, Oxford.
Åslund, A., Boone, P., Johnson, S., 1996. How to stabilise: Lessons from
post-Communist countries. Brookings Papers on Economic Activity,
1:217–314.
14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
265
Auty, R.M., 1995. Industrial policy capture in Taiwan and South Korea.
Development Policy Review, 13: 195–217.
Auty, R.M., 2001a. Resource Abundance and Economic Development.
Oxford University Press, Oxford.
Auty, R.M., 2001b. Transition reform in the mineral-rich Caspian region
countries. Resource Policy, 27(1): 25–32.
Auty, R.M., Gelb, A.H., 2001. Political economy of resource-abundant
states. In: Auty, R.M. (Ed.), Resource Abundance and Economic
Development. Oxford University Press, Oxford, 126–144.
Berg, A., Borensztein, E., Sahay, R., Zettelmeyer, J., 1999. The evolu-
tion of output in transition economies: Explaining the differences.
IMF Working Paper 99/73. International Monetary Fund (IMF),
Washington, DC.
Bourdet, Y., 2000. The Economics of Transition in Laos: From Socialism
to ASEAN Integration. Edward Elgar, Cheltenham.
Cai, X., McKinney, D.C., Rosegrant, M.W. (2003) Sustainability analysis
for irrigation water in the Aral Sea region. Agricultural Systems
(forthcoming).
De Melo, M., Denizer, C., Gelb, A., 1996. Patterns of transition from plan
to market. World Bank Economic Review, 10: 397–424.
De Melo, M., Denizer, C., Gelb, A., Tenev, S., 2001. Circumstance
and choice: The role of initial conditions and policies in transition
economies. World Bank Economic Review, 15: 1–31.
European Bank for Reconstruction and Development (EBRD), 1999.
Transition Report 1999: Ten Years of Transition. European Bank for
Reconstruction and Development (EBRD), London.
European Bank for Reconstruction and Development (EBRD), 2000.
Employment Data for Transition Economies 1990–98. European Bank
for Reconstruction and Development (EBRD), London.
European Bank for Reconstruction and Development (EBRD), 2002.
Transition Report 2002: Agriculture and Rural Transition. European
Bank for Reconstruction and Development (EBRD), London.
Economist Intelligence Unit (EIU), 1996. Country Report: Kyrgyz Republic,
Tajikistan, Turkmenistan and Uzbekistan, Fourth Quarter. Economist
Intelligence Unit (EIU), London.
Esanov, A., Raiser, M., Buiter, W., 2001. Nature’s blessing or nature’s
curse: The political economy of transition in resource-based eco-
nomies. EBRD Working Paper 66. European Bank for Reconstruction
and Development (EBRD), London.
Fischer, S., Sahay, R., Vegh, C.A., 1996. Stabilization and growth in
transition economies: The early experience. Journal of Economic
Perspectives, 10: 45–66.
Fischer, S., Sahay, R., Vegh, C.A., 2000. The transition economies after
ten years. IMF Working Paper 00/30. International Monetary Fund
(IMF), Washington, DC.
Fueg, J-C., 2000. Caspian states oil and gas production and revenue
projection. Paper presented to the RIIA Conference. Royal Institute
of International Affairs, London. 6 October.
Gelb, A.H., Jefferson, G., Singh, I., 1993. Can Communist economies
reform incrementally? The case of China. NBER Macroeconomics
Annual 1993. National Bureau of Economic Research, Cambridge,
MA, 87–133.
Havrylyshyn, O., Izvorski, I., van Rooden, R., 1998. Recovery and growth
in transition economies: A stylized regression analysis. IMF Working
Paper 98/141. International Monetary Fund (IMF), Washington,
DC.
International Monetary Fund (IMF), 1997. Turkmenistan: Recent Eco-
nomic Developments. International Monetary Fund (IMF), Washing-
ton, DC.
International Monetary Fund (IMF), 2000. Republic of Uzbekistan: Recent
Economic Developments. IMF Staff Country Report 00/36. Interna-
tional Monetary Fund, Washington, DC.
Jones Luong, P., 2002. Institutional Change and Political Continuity in
Post-Soviet Central Asia: Power, Perceptions and Pacts. Cambridge
University Press, Cambridge.
Jones Luong, P., Weinthal, E., 2001. Prelude to the resource curse. Com-
parative Political Studies, 34(4): 367–99.

266 Richard Auty / Natural Resources Forum 27 (2003) 255–266
Kopstein, J.S., Reilly, D.A., 2000. Geographic diffusion and the trans-
formation of the post-communist world. World Politics, 53: 1–37.
Krueger, A.O., 1993. Political Economy of Policy Reform in Developing
Countries. MIT Press, Cambridge, MA.
Lau, L.J., Qian, Y., Roland, G., 2000. Reform without losers: An interpreta-
tion of China’s dual-track approach to transition. Journal of Political
Economy, 108: 120–143.
Li, S., Li, S., Zhang, W., 2000. The road to capitalism: Competition and
institutional change in China. Journal of Comparative Economics, 28:
269–292.
Mellor, J.W., 1995. Agriculture on the Road to Industrialization. Johns
Hopkins University Press, Baltimore, MD.
Pastor, G., van Rooden, R., 2000. Turkmenistan: The burden of current
agricultural policies. IMF Working Paper 00/98. International Mon-
etary Fund, Washington, DC.
Pomfret, R., 2000. Agrarian reform in Uzbekistan: Why has the Chinese
model failed to deliver? Economic Development and Cultural Change,
48: 269–84.
Pomfret, R., Anderson, K.H., 1997. Uzbekistan: Welfare impact of slow
transition. WIDER Working Paper 135. World Institute for Devel-
opment Economics Research (WIDER), United Nations University,
Helsinki.
Popov, V., 2000. Shock therapy versus gradualism: The end of the debate.
Comparative Economic Studies, 42: 1–57.
Raiser, M., Schaffer, M., Schuchardt, J., 2001. Economic development,
structural change and transition. Working Paper. Department of Eco-
nomics, Heriot-Watt University, Edinburgh.
14778947, 2003, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/j.0165-0203.2003.00060.x by Justus Liebig Universitaet Giessen, Wiley Online Library on [06/04/2023]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Roland, G., 2000. Transition and Economics: Politics, Markets and Firms.
MIT Press, Cambridge, MA.
Rosenberg, C.B., de Zeeuw, M., 2000. Welfare effects of Uzbekistan’s
foreign exchange regime. IMF Working Paper 00/61. International
Monetary Fund (IMF), Washington, DC.
Sagers, M.J., 1994. Long-term program for Turkmenistan’s oil and gas
sector. Post-Soviet Geography, 35(1): 50 –62.
Spoor, M., 1998. The Aral Sea basin crisis: Transition and environment in
Former Soviet Central Asia. Development and Change, 29: 409–435.
Stauffer, T., 1975. The prospects of energy-intensive industry in the Per-
sian/Arabian Gulf. mimeo. Centre for Middle Eastern Studies, Harvard
University, Cambridge, MA.
Tanzi, V., Tsibouris, G., 2001. Transition and the changing role of
government. In: Havrylyshyn, O., Nsouli, S.M. (Eds.), A Decade of
Transition: Achievements and Challenges. International Monetary Fund
(IMF), Washington, DC.
World Bank, 2000. Making Transition Work for Everyone: Poverty and
Inequality in Europe and Central Asia. The World Bank, Washington,
DC.
World Bank, 2001. World Development Indicators. The World Bank,
Washington, DC.
World Bank, 2003a. Uzbekistan Country Economic Memorandum. The
World Bank, Washington, DC.
World Bank, 2003b. Irrigation in Central Asia: Socio-economic and
Environmental Considerations. The World Bank, Washington, DC.
Zettelmeyer, J., 1998. The Uzbek growth puzzle. IMF Working Paper 98/
133. International Monetary Fund (IMF),Washington, DC.