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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 socioeconomic 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 62 Estonian Human Development Report 2012/2013
Table 2.1.1 Structure of the Bertelsmann Transformation Index (criteria that are utilised). Assessments of Estonia’s development, on a scale of one to ten, in parentheses. Status Index (9.28) Management Index (7.41) Political transformation criteria Economic transformation criteria Process management criteria Stability of democratic institutions (10.0) Political participation (9.8) Rule of law (9.8) Stateness (9.5) Political and social integration (8.8) Organisation of the market and competition (10.0) Private Property (10.0) Currency and price stability (9.5) Welfare regime (9.0) Sustainability (8.5) Level of socioeconomic development (8.0) Economic performance (8.0) International cooperation (9.7) Steering capability (9.0) Consensus building (8.8) Resource efficiency (8.7) Level of difficulty (1.9) Source: Bertelsmann 2012 Table 2.1.2 The development dynamics of the highly advanced transition countries, based on the Bertelsmann Status Index from 2003 to 2012 2003 2006 2008 2010 2012 Rank Score Rank Score Rank Score Rank Score Rank Score Slovenia 1. 9.45 2. 9.49 2. 9.6 2. 9.52 3. 9.45 Estonia 2. 9.29 3. 9.42 6. 9.5 4. 9.34 5. 9.28 Czech Republic 3. 9.23 1. 9.56 2. 9.6 1. 9.65 1. 9.61 Taiwan 4. 9.18 4. 9.33 8. 9.2 3. 9.39 2. 9.54 Hungary 5. 9.16 5. 9.18 1. 9.7 8. 9.00 12. 8.48 Slovakia 6. 9.06 7. 9.14 2. 9.6 6. 9.14 8. 8.88 Lithuania 7. 9.02 6. 9.16 2. 9.6 7. 9.04 7. 9.03 South Korea 8. 8.99 10. 8.89 8. 9.2 12. 8.72 11. 8.73 Poland 9. 8.90 11. 8.76 7. 9.4 10. 8.86 6. 9.05 Chile 10. 8.85 8. 8.89 8. 9.2 9. 8.99 9. 8.87 Costa Rica 12. 8.70 12. 8.73 11. 8.9 10. 8.86 10. 8.84 Uruguay 13. 8.67 9. 8.90 13. 8.6 5. 9.25 4. 9.30 Latvia 14. 8.20 13. 8.60 12. 8.7 13. 8.51 13. 8.29 Source: Bertelsmann 2004, 2005, 2008, 2009, 2012 it achieved in 2008, to 12 th ; and Slovakia, from second to eighth. Based on the sub-index of economic transformation, Latvia fell out of the group of countries with highly advanced market economies, while a relatively high score for political transformation helped to keep it in the this group of states. Estonia stands out for its stability, although it has slipped from its initial second position to fifth; while Slovenia has demonstrated the most stability, by remaining at the top of the transition countries until 2011. The dramatic decline suffered by Slovenia, in 2012 and 2013, is not yet reflected in the Bertelsmann indices. Based on the Political Transformation Index (2012), the transition countries were divided into five groups: democracies in consolidation (23 states), defective democracies (39 states), highly defective democracies (13 states), moderate autocracies (20 states) and hard-line autocracies (33 states). As noted above, the political transformation in Uruguay was assessed as most effective, followed by the Czech Republic, Taiwan, Slovenia and Estonia. All the remaining new EU Member States, including Bulgaria and Romania, are included among the democracies in consolidation. Russia is classified as a highly defective democracy. Four of the CIS states are assessed as being more democratic than Russia – Moldova, Georgia, and Ukraine are classified as defective democracies, and Kyrgyzstan, together with Russia, is among the highly defective democracies. Of the states that are less democratic than Russia, Armenia, Azerbaijan and Kazakhstan are rated as moderate autocracies, and Belarus, Tajikistan, Uzbekistan and Turkmenistan are rated as hardline autocracies (Bertelsmann 2012: 29). Based on the Economic Transformation Index (2012), the transition countries were divided into five groups: developed market economies (15 states), func- Estonian Human Development Report 2012/2013 63
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ESTONIAN HUMAN DEVELOPMENT REPORT 2
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Table of Contents 1 Human Capital /
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Dear Reader Since the moment when E
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1Human Capital Estonian Human Devel
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the HDI’s content has also been h
Page 13 and 14: Figure 1.1.1 The human development
Page 15 and 16: Figure 1.1.7 The income sub-index:
Page 17 and 18: The results of the Princeton Projec
Page 19 and 20: the hypothetical generation. The to
Page 21 and 22: Figure 1.2.3 Life expectancy. Eston
Page 23 and 24: Table 1.2.2 also presents the most
Page 25 and 26: The new trends that are appearing i
Page 27 and 28: Figure 1.2.8 Components of populati
Page 29 and 30: New features were introduced into E
Page 31 and 32: Initiation of Voluntary Birth Contr
Page 33 and 34: Table 1.3.1 Best-known educational
Page 35 and 36: (OECD 2012b). Therefore a certain r
Page 37 and 38: The reciprocal dependence of the pr
Page 39 and 40: Figure 1.3.8 Percentage of students
Page 41 and 42: Table 1.3.4 The quality of educatio
Page 43 and 44: 1.4 Health Raul-Allan Kiivet Change
Page 45 and 46: Table 1.4.1 Usage of prescription m
Page 47 and 48: allude to the fact that approximate
Page 49 and 50: promote healthy lifestyles among th
Page 51 and 52: Figure 1.5.1 The World Values Surve
Page 53 and 54: Table 1.5.2 Estonia’s participati
Page 55 and 56: Figure 1.5.3 The percentage of the
Page 57 and 58: Figure 1.5.5 Percentage of the Esto
Page 59 and 60: The fact that Estonia’s position
Page 61 and 62: Summary Mati Heidmets The global vi
Page 63: 2People and Society Estonian Human
Page 67 and 68: tioning market economies (15 states
Page 69 and 70: 2.2 Freedom and democracy Martin M
Page 71 and 72: Table 2.2.1 Democracy indicators Po
Page 73 and 74: Figure 2.2.2 The distribution of th
Page 75 and 76: would be something that none of the
Page 77 and 78: political participation are general
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Page 83 and 84: Figure 2.4.2 Average circulation of
Page 85 and 86: 2.5 Corruption Jüri Saar In accord
Page 87 and 88: Lithuania, 61%; and in Russia, 69%.
Page 89 and 90: 2.6.2 Intentional homicides in Esto
Page 91 and 92: crime. And thirdly, there was a wis
Page 93 and 94: References 1. Ahven, A. & Tabur, L.
Page 95 and 96: states included in the EU Kids Onli
Page 97 and 98: 2.8 Public assessments of the state
Page 99 and 100: Figure 2.8.4 Changes releated to tr
Page 101 and 102: of the state’s development are en
Page 103 and 104: Table 2.9.1 The positions of Estoni
Page 105 and 106: 3. IEP (2011). Structures of Peace.
Page 107 and 108: 3Welfare and the Quality of Life Es
Page 109 and 110: choices made, not what people say t
Page 111 and 112: Figure 3.1.5 Public social spending
Page 113 and 114: tion agreed upon the social contrac
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References 1. Aidukaite, J. (2006).
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hand, to the “inequality of acces
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and explanations of the extent of i
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5- much more than I deserve. Some d
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people in Estonia consider the inco
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Table 3.3.1 Experienced Well-Being
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at about 70%. In Latvia and Lithuan
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sign. It seems that the usual view
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3.4 Quality of life Anu Toots 3.4.1
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a uniform composite indicator has n
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3.4.6 The components of life qualit
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Figure 3.4.4c Perceived quality of
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Figure 3.4.5 Changes in the depriva
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3.5 Environment dimension of well-b
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Figure 3.5.1.b Estonia’s position
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3.5.4 Energy intensity The energy i
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productivity, which is defined as t
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perceive themselves as worse off th
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4The Economy Estonian Human Develop
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vide a valuable connection for maki
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Figure 4.1.3 Components of economic
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ule of law, the sub-indicators for
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References 1. Acemoglu, D.; Robinso
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Development Report employs generali
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and pasture land, and this was capi
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Basing the total and net savings re
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4.3 Labour market Reelika Leetmaa,
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The problems include the very limit
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• Expenditures for active labour
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who lose their jobs. These ensure i
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4.4 Productivity and the economic s
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labour costs at the company level r
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Table 4.4.4 Comparison of the produ
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Figure 4.4.1 Annual average increas
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4.5 Innovation Erik Terk, Katrin M
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Table 4.5.2 Comparison of innovatio
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Table 4.5.4 Comparison of the indic
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in order to make the R&D potential
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It is characteristic of the South K
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mechanisms for increasing their sta
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Globalisation and Policy Patterns 5
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When Estonia regained its independe
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5.2 The impacts of globalisation an
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Table 5.2.2 Support of the differen
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5.3 Development policies Erik Terk,
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• C -the “Estonia-centred” su
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Figure 5.4.1 Support for the possib
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Summary Erik Terk Estonia is part o
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ehavioural patterns. Therefore, it
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EDR 2012/2013 authors Clemens Buche
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EDR 2012/2013 authors Alari Purju i
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Editor-in-Chief: Mati Heidmets Prod
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