DEVELOPMENT

2.1
General success of the development:
Bertelsmann Transition Index
Peeter Vihalemm
In May of 2004, the Bertelsmann Foundation in Germany
first published the results of a project that was
started in 1996, which tried, with the help of comparative
composite indices, to measure the development of
116 transition countries/economic areas on their path
to democracies based upon market economies, during
the years 1998 to 2003. In autumn 2005, the second
Bertelsmann Transition Index was published, which
analysed development between 2001 and 2005; in February
2008, the third index, which included development
from 2005 to 2007; in November 2009, the fourth
index, which summarises development from 2007 to
2009. The fifth index (BTI 2012), published in March
2012, included developments from 2009 to 2011, and
the number of states/territories that were under observation
had increased to 128.
The surveys do not include the states that were
OECD members in 1989 – democratic states with
highly developed economies that has been consolidated
for a long time (Western European states, USA, Canada,
Japan, Australia, New Zealand), as well as states with
populations under 2 million. However, an exception
was made in the case of several smaller states, which
are interesting from a transformational point of view,
and also includes Estonia.
The cognitive value of the Bertelsmann Transition
Index is based on the multidimensional institutional
model of the transformational process that forms the
basis of this index, and which can be successfully
employed to compare the economic and political developments
occurring in various parts of the world. Based
on this model, transformation is defined as “a politically
managed broad-based process of change, in the course
of which an authoritarian system develops in the direction
of democracy and a market economy” (Bertelsmann
2012: 131).
With the help of a special codebook, a network of
international experts, assembled by the Bertelsmann
Foundation, evaluates and analyses the political and
economic development of each country, by using the
international statistical data available for each country.
Nineteen criteria were used to compute the com posite
index for comparing the states in 2004, of which,
many were comprised of several indicators, for a total
of 58. In both 2008 and 2012, 17 criteria and 52 indicators
were used to compute the index (Bertelsmann
2008: 73–85; Bertelsmann 2009: 16–22; Bertelsmann
2012: 129–132). The scores based thereon comprised
expert opinions on a scale of one to ten, which were
often based on quantitative (statistical) indicators.
Based thereon, two composite indices were compiled
– the Status Index and the Management Index – see
Table 2.1.1. The Status Index assesses the political and
economic development (transformation) of the countries
with the help of two analytical dimensions. These
are, on the one hand, the movement toward democracy
under the rule of law and, on the other hand, the
movement toward a market economy anchored in principles
of social justice. The Management Index assesses
the quality of governance, as well as effectiveness in
establishing and fulfilling goals.
Transformation – the integral reorganisation
and formation of society – does not mean straightforward
or irreversible development without setbacks
or missteps (Bertelsmann 2012: 131), which is clearly
indicated, for instance, by Hungary’s political retrogression,
as well as by the great fluctuations in the success
of Slovenia’s and Slovakia’s process management, etc.
(see Tables 2.1.2 and 2.1.3).
Comparing the various aspects of Estonia’s development
between 2009 and 2011, based on the assessments
of the aforementioned criteria (Table 2.1.1), we see that
the stability of the democratic institutions, organisation
of the market and competition, as well as the extent of
private ownership get high marks. In Estonia’s case, relatively
low marks are given to the level of socio- economic
development, as well as the growth potential and sustainability
of the economy in the years impacted by the
economic crisis.
Based on the Status Index, Estonia’s transition path
has been successful – placing second, after Slovenia, in
the summary for 2006; in third position, after the Czech
Republic and Slovenia, in 2008; in fourth place, after
the Czech Republic, Slovenia and Taiwan in 2010; and
in 2012, after the Czech Republic, Taiwan, Slovenia, and
Uruguay, in fifth p position. In all cases, the results were
uniformly high in both political and economic development
(Table 2.1.2).
In Table 2.1.2, we see that the composition of
the group of highly advanced countries with market
economies has been very stable. All the countries were
already included in this group in the 2003 index, and
the composition has remained the same, although
some states, within the group, have experienced rises
and falls – Uruguay underwent a strong rise from 13 th
position to fourth (the determining factor was a very
successful political democratisation process, which put
Uruguay in first place, among the transition countries,
while remaining in tenth place based on the success
of its economic reforms; see Table 2.1.3). Slovakia and
Hungary have also undergone sudden increases and
decreases: Hungary has declined from first rank, which
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Estonian Human Development Report 2012/2013