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© 2007Bertelsmann StiftungCarl-Bertelsmann-Straße 256D-33311 Güterslohwww.bertelsmann-transformation-index.de

Responsible:Bertelsmann Stiftung, Gütersoh

Sabine Donner, +49 52 41 81 81 501sabine.donner@bertelsmann.deDr. Hauke Hartmann, +49 52 41 81 81 389hauke.hartmann@bertelsmann.de

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Political Managementin International Comparison

Bertelsmann Transformation Index 2008

Further information on the BTI 2008

The BTI book includes a summary of findings,regional reports and a methodological overview; anaccompanying CD Rom includes all 125 countryreports: Bertelsmann Stiftung. Bertelsmann Trans -formation Index 2008: Political Management inInternational Comparison. Gütersloh: BertelsmannStiftung Verlag, 2008.

All 125 country reports as well as further infor-mation on the project are available online at:www.bertelsmann-transformation-index.de. Alsoavai la ble at the site is the Bertelsmann Trans for -mation Atlas, an interactive visualization and com-parison of the BTI 2008 and its corpus of data –including 6500 scores – using maps and graphics. BTI 2008

In fact, the body of data and assessments collect-ed for the Bertelsmann Transformation Index 2008show that leaders and decision makers in 70 of the125 countries examined are striving for democra-cy and a market economy. But the BTI’s countryreports also indicate that many of the world’s youngdemocracies are not living up to their citizens’ expec-tations. All too frequently, newly elected govern-ments exploit both their mandate and office forpersonal gain. They tolerate dramatic social dispari-ties, capitulate to the demands of powerful interestgroups, and fail to break free of sclerotic traditions.This failure of leadership enhances the attractive-ness of competing models, as evidenced by the suc-cess of populist electoral campaigns in LatinAmerica or the emboldened confidence of authori-tarian and economically successful regimes in Asiaand the Gulf region.

It is for these reasons that the BertelsmannTrans for mation Index underscores the importanceof a democracy anchored in the rule of law and amarket economy flanked by sociopolitical safe-guards. An operable separation of powers is neededto hold political leaders accountable for their deci-sions, to maintain transparency in decision-makingprocesses and to ensure civil rights. Sustainableeconomic development supported by a solid institu-tional framework is needed to fight poverty, establishequal opportunity and compensate for harsh socialconditions.

The corpus of the BTI 2008 – 125 countryreports and 6500 individual scores – shows thatshortcomings in the rule of law and sociopoliticalconcerns account for the largest set of deficienciesin transformation processes currently under way.Countries such as Argentina or Mali with overallgood democracy scores share a common weak spot:a relatively weak rule of law. In total, only 13 of 75democracies have an independent judiciary and afunctioning separation of powers that is free of con-straints. In fact, the abuse of office is penalized in only seven countries. Particularly disappointed by

the level of corruption, patronage and arbitrary deci-sion-making in politics are the citizens in those 52democracies, that, in BTI terms, show defective orhighly defective structures and processes. The needto improve structures of representation, the rule oflaw and effective anti-corruption practices is urgentin these countries.

There are severe problems in the economicsphere as well. Since the first BTI in 2003, theglobal economy has enjoyed stable growth andthus created a favorable environment for develop-ment processes and reform agendas. BTI scores foreconomic performance have therefore progressivelyimproved in most countries, but the scores for allother economic transformation criteria have essen-tially stagnated. This trend is worrying for two rea-sons. First, economic growth driven by a highdemand for raw materials seems to lure severalgovernments – particularly in Africa and LatinAmerica – to move away from the path of sustain-able development by neglecting to consolidate theinstitutions needed for market economic develop-ment. Secondly, broad sectors of society are not ben-efiting from economic growth enough to showgrowth in the level of socioeconomic development,improved social security and greater equality ofopportunity. Potential crises harbored by structuraldeficits and social disparities can be unleashedduring weak periods in the economic cycle.

The Bertelsmann Transformation Index allowsfor a differentiated understanding of these com-plex processes of change. Comprehensive in itsapproach, and with its emphasis on the quality ofgovernance, the BTI has become a trusted measureof good governance for scholars and decision mak-ers alike. We are pleased to introduce the BTI2008 and once again look forward to the momen-tum and ideas it sets in motion among thoseengaged in the work of foreign and developmentpolicy, scholarly research, media, and above all,those individuals working to advance democracyand reform in their country.

Foreword BTI 2008 Results Ranking Tables Regional Overviews Criteria Status Index Criteria Management Index BTI Board3 4 12 14 16 20 23

Foreword 3

Worldwide, democracy and a market economy remainthe dominant concepts for shaping change.

4 BTI 2008 Results

defective democracies.” These countries are charac-terized by grave deficiencies in the rule of law, thelimited equality of opportunity for voices of oppo-sition and manipulated elections. Kyrgyzstan,Burundi, Liberia and Haiti have moved up fromtheir BTI 2006 classification as autocracies to thecategory of highly defective democracies. The failedstates of Afghanistan, the Democratic Republic ofCongo, Iraq and the Central African Republic areincluded in the group of 50 autocracies because,although they have held elections, the state’s erod-ed or nearly absent monopoly on the use of forcehas created a situation in which no democratic rela-tions can be attested to. Despite all efforts,Afghanistan and Iraq remain two catastrophicexamples of failed international politics. They showthat attempts to force democratization upon a coun-try are doomed to fail when the requisite structuralconditions are not taken into consideration.

Bertelsmann Transformation Index 2008: Findings Summary

Status of political and economic transformation in 125 countries

The constellation of top-ranked countries in theStatus Index has changed little since the BTI 2006.New to this year’s top ten is Uruguay, while Polandhas dropped out of the group.

The BTI 2008 shows fourteen countries charac-terized as consolidated or advanced democraciesunder the rule of law with a socially responsiblemarket economy. For the most part, this group is thesame as that of the BTI 2006. Having shown someimprovement, Latvia is this year’s newcomer to thetop group. The group consists of nine Europeanstates (eight EU accession states and Croatia), twoAsian states (Taiwan, South Korea) and three LatinAmerican states (Chile, Uruguay, Costa Rica).Together they make up a group of top performersshowing a relatively robust level of socioeconomicdevelopment.

Among the 125 countries assessed by the BTI,75 fulfill the basic requirements of a democracyunder the rule of law. Whereas 23 democraciesshow only minor flaws, ten are classified as “highly

Management Index: the largest drops in scores

Country � Score Rank

Guinea – 1.23 2.61 113Poland – 1.09 5.27 53Mozambique – 1.05 5.00 63Venezuela – 0.88 2.15 119Sierra Leone – 0.72 5.01 62Chad – 0.63 2.61 113Bangladesh – 0.59 4.14 93Senegal – 0.58 6.19 29Slovenia – 0.58 6.83 12Bolivia – 0.56 4.72 74

BTI 2008 Results 5

Political management: pulling ahead and falling behind

In contrast to the Status Index, the ManagementIndex’s top ten shows more visible change. Slovenia,Lithuania and the Czech Republic are no longer atthe top. Uruguay, Croatia, South Africa and Latviahave taken their place.

Compared to the BTI 2006, 16 countries showstrong improvement in governance. Macedonia,Paraguay, India and Benin are the most successfulof the group.

The most spectacular change is Poland’s drasticdrop in the Management Index ranking, which canbe attributed to the government’s relaxation ofreform measures following EU accession, a populistturn in domestic politics and a confrontational for-eign policy. Seized by crisis and a state of emer-gency during the review period, Guinea fell farthestin the Management Index ranking. Increasingpolarization accompanied by the erosion of consen-sus in Bolivia, Mozambique and Venezuela is one of the root causes of these countries’ drop in ranking.Deteriorating political management in countries

such as Mozambique and Sierra Leone, which havereceived ample support from the donor community,represents a disappointment for all concerned.Demonstrating that even successful reforms can bewatered down if complacency sets in or consensus-building is eroded, Slovenia and Senegal havedropped significantly in rank.

Advocating the twin goals of democracy under the rule of law and a market economy flanked by sociopolitical safeguards, theBTI provides agents of reform with numerous examples of successful transformation management by examining 125 countries andranking them in two indices. Whereas the Status Index shows a country’s achieved state of development on the way to democracyand a market economy as of spring 2007, the Management Index evaluates the quality of governance among decision makers from2005 to 2007. Included are all countries with a population of more than two million that have not achieved the status of a fully con-solidated market-based democracy by the start of the review period. Bahrain, Botswana, Estonia, Mauritius and Montenegro havealso been included as cases of special interest.

The Management Index Top Ten 2008

1 Chile 2 Estonia3 Botswana4 Mauritius5 Slovakia6 South Korea7 Taiwan8 Uruguay9 Croatia

10 Latvia, South Africa

The Status Index Top Ten BTI 2008

1 Czech Republic 2 Slovenia3 Estonia4 Taiwan5 Hungary6 Lithuania7 Slovakia8 Chile9 Uruguay

10 South Korea

6 BTI 2008 Results

SUDAN

IRAQ

YEMEN

LEBANON

CÔTED’IVOIRE

ZIMBABWE

SOMALIA

ANGOLA

DR CONGO

CHAD

TAJIIKISTAN

AFGHANISTAN

SRI LANKA

HAITI

MYANMAR

REP. CONGO

MALI

KENYA

LIBERIA

GUINEANIGERIA

CENTRAL AFRICANREPUBLIC

NIGER

NEPAL

NEW GUINEA

PAKISTAN

PAPUA-

COLOMBIA

Successful transformation requires that a statehave functioning administration structures and thatit secure its monopoly on the use of force. Withoutthese two in place, a state cannot guarantee and pro-vide for the rule of law or the security of its popula-tion. The BTI 2008 shows that there are 27 countriesin which the state’s monopoly on the use of force isunder threat and its administrative structures arebarely operable. The roots and extent of a state’sfragility vary tremendously:

Countries such as Afghanistan, Côte d’Ivoire, Iraq,Nepal, Somalia, Sudan and the Central AfricanRepublic are all (post-)conflict countries in which con-flict resolution or state-building take top priority.

In Angola, Haiti, Mali, Myanmar and Chad, thestate and its administration fail to implement theirauthority throughout the entire country; separatistmovements, locally operating rebel movements andthe lack of a decentralized infrastructure have ledto entire regions being decoupled from the rest ofthe country.

Corruption, an underfinanced administrationand mismanagement in Guinea and Zimbabwe haveled to a situation in which basic security and stateservices are not provided. Zimbabwe also suffersfrom the fact that the ruling elite is exploiting thestate structures already in place.

States such as Colombia or Papua New Guineashow a combination of various characteristics ofweak stateness.

Die Top Ten desBertelsmann Trans-

for mation Index im Vergleich der Jahre

2003 und 2006

In addition to seven failed states, there are tendemocracies and ten autocracies within this groupof 27 fragile states. For most fragile states, theinability to provide basic administrative services isthe most prominent marker of precarious stateness.In countries like Iraq, Somalia, Sudan and the CentralAfrican Republic, strong ethnic, religious or region-al identities undermine state identity, and thustear at the fabric of an already precarious stateness.

A problem in several regions of the world, weakstateness is most pronounced in Africa, where 15 ofthe 27 fragile states assessed by the BTI are located.Particularly the vast and troubled region of CentralAfrica that includes Chad, Sudan, the CentralAfrican Republic and the Democratic Republic ofCongo shows a high degree of fragility. To makematters worse, the region is bordered by other weakstates such as Angola, the Republic of Congo, Nigerand Nigeria. Indeed, the weak African states showglaringly low levels of achievement for most criteriaassessed by the BTI. While these countries fare com-

paratively well in terms of political participation andpolitical and social integration, their governmentsprovide only rudimentary – if any – social servicesfor the population. Given that several of these coun-tries are showing relatively satisfactory economicgrowth rates, this situation does not bode well forthe future, especially as growth driven by increas-ing prices for raw materials will further exacerbatedisparities in income and assets. More must be doneto fight poverty and ensure basic social needs ifthese states are to prevent further damage to thesocial fabric of their societies.

Weak Stateness

Fragile states

Very fragile states

Failed states

BTI 2008 Results 7

Top Ten desBertelsmann Trans-

for mation Index im Vergleich der Jahre

2003 und 2006

It is particularly noteworthy that despite havingreceived low marks for the rule of law and struc-tures of representation, defective democracies haveimproved upon an already high level of achievementin political participation. Given the fact that free andfair elections are commonly used as a key indicatorof democratization, high marks for participationappear to be heralding good news. However, manyof these elections fail to meaningfully influence theleadership’s effective power to govern – as is thecase in Afghanistan, the Democratic Republic ofCongo and Iraq – or, as seen elsewhere, the populistcampaigns carried out in the run-up to electionsfacilitate social polarization. Countries such asArgentina, Bolivia, Ecuador and Venezuela in LatinAmerica and the Philippines and Thailand inSoutheast Asia stand as examples of how an anemicrule of law and frail structures of representationcan render a state susceptible to populist move-

ments that fill up the vacuum left by insufficientpolitical representation.

Nevertheless, the scores given for the state ofdemocracy in all 52 defective democracies have notfallen, on average. In fact, the scores for all fivepolitical transformation criteria have improvedsomewhat. Twelve states have made notableimprovements to their rule of law standards. Theyinclude not only states in which new leadershipmeant positive change, such as Liberia orBurundi, but democracies such as Brazil andTurkey as well. This generally positive trend ismanifest most notably in the fact that three coun-tries, namely Ghana, India and Namibia, havemade enough headway in improving the quality oftheir system of government that they now countamong those states in the midst of consolidatingtheir democracies.

Defective democracies – in which political andcivil rights or an effective separation of powers arenot adequately ensured, despite relatively free elec-tions – have proved their intransigence. Clearly ableto achieve relative stability over the years, thesestates are nonetheless prone to political crises.

Whereas more than 20 democracies have madegreat strides in consolidating their democracies, theremaining 52 still have a relatively long way to gobefore they become functioning democracies. Thesedefective (42) or highly defective (10) democraciesshow two major qualitative shortcomings, namelyan insufficient primacy of the rule of law and weakstructures of representation. Only 13 of 75 democra-cies have a functional separation of powers includ-ing a sufficiently independent judiciary. In somecountries, such as Russia or Venezuela, the concen-

tration of power in the executive branch is a threatto the democratic system as a whole.

Political and social integration is essential toconsolidating a democratic system. And yet, this cri-terion proved to be the weakest among the democ-racies assessed in the BTI 2008. Assessments givenfor this criterion point to three key problems: theabsence of a moderate and stable representativeparty system; weak or disproportionate representa-tion via interest groups; and an insufficient level ofsocial capital. Typically, established lobby or cronyinterests predominate in influencing the decision-making process. Though expert surveys and pollsindicate that democratic norms are relatively wellestablished throughout most of these democracies’societies, the structures of mediation between thestate and society are weak.

Defective Democracies

BTI 2008 Results 98 BTI 2008 Results

SRI LANKA

EL SALVADORHONDURAS

JAMAICA

NICARAGUA

DOMINICANREPUBLIC

TURKEY

RUSSIA

MONGOLIA

ARMENIA

MALI

BENIN

BURKINAFASO

SIERRALEONE

MALAWI

MOZAMBIQUE

MADA-GASCAR

NIGERIA

ZAMBIA

NIGER

UKRAINE

TANZANIA

BOSNIA A. HERZEGOVINA

NEW GUINEAPAPUA-

BRAZIL

COLOMBIA

MEXICO

PERU

ECUADOR

GUATEMALA

ARGENTINA

BOLIVIA

PARAGUAY

INDONESIA

ALBANIA MACEDONIASERBIA

MONTENEGRO

MAURITANIA

VENEZUELA

SENEGAL

LEBANON

KENYA

UGANDA

TAIWAN

SOUTHKOREA

COSTA RICA

MAURITIUS

PANAMAGHANA

BOTSWANA

SOUTH AFRICA

SLOVAKIACZECH REPUBLIC

SLOVENIA

ESTONIALATVIA

LITHUANIA

POLAND

BULGARIAROMANIA

INDIA

CHILE

URUGUAY

MOLDOVA

GEORGIA

BANGLADESH

PHILIPPINES

HAITI

BURUNDI

LIBERIA

KYRGYZSTAN

HUNGARY

CROATIA

NAMIBIA

StatenessMonopoly on the use of force

State identity No religious dogmas Basic administration

Political ParticipationFree and fair elections

Effective power to govern Association/assembly rights

Freedom of expression

Rule of LawSeparations of powers Independent judiciary

Prosecution of office abuse Civil rights ensured

Stability of Democratic InstitutionsDemocracy performs Democracy accepted

Political and Social IntegrationParty system

Interest groupsConsent to democratic norms

Social capital

Democracies

Defective democracies

Highly defective democracies

Strong improvement

Improvement

Deterioration

�

�

�

Defective democracies Democracies Autocracies

Major weaknesses in defective democracies: erosion of the rule of law and lack of political /social integration

10

9

8

7

6

5

4

3

2

1

0

Stateness Political and SocialIntegration

Stability of DemocraticInstitutions

Rule of LawPoliticalParticipation

Democracies

Defective democracies

Highly defective democracies

Autocracies

Economic Growth and Social Responsibility

A favorable global economy combined with thegrowing demand for raw materials has provided forimproved economic performance and increasedlevels of income on average in all regions. Themacro economic indicators in 54 countries point tostronger economic output. Countries such asBosnia-Herzegovina, Kenya and Chad are among thefew that proved incapable of taking advantage ofthis trend.

Although there are clear and well-defined rulesfor stable, market-based competition in severalcountries, the consolidation of an institutionalframework is stagnating. It appears that manygovern ments tend to neglect regulatory policy andabandon anticipated reforms during periods in

which they have greater maneuvering capacity.Leaving reform by the wayside, they ensure thattheir economies will remain susceptible to crises.

An inadequate welfare regime and the lack of astrategic approach in ensuring environmental andeducational sustainability continue to be two of themost jarring weaknesses in many of these coun-tries’ economies. The continued prevalence of wide-spread poverty in Africa and Latin America, and theminimal improvement made in the level of socio-economic development in both are especially worri-some given the global economy’s uninterruptedgrowth in recent years. Politically unstable coun-tries in these regions are especially prone to pop-ulist movements or autocratic tendencies.

BTI 2008 Results 1110 BTI 2008 Results

Level of Socioeconomic Development

Organization of the Market and Competition

Currency and Price Stability

Private Property

Welfare Regime

Economic Performance

Sustainability

8 35 51 31

24 76 22 3

4 37 67 17

15 62 41 7

22 81 16 6

11 55 49 10

4 30 73 18

10 – 9 (very good) 8 – 6 (good) 5 – 3 (weak) 2 – 1 (very weak)

7.57.57.57.07.57.57.57.06.56.56.56.07.06.56.06.06.06.0

8.08.08.08.07.07.07.07.07.07.07.07.06.06.06.06.06.06.0

Welfare regime/social welfare mechanisms

Several fast-growing economies, few well-functioning social systems. The distribution of countries and scores for each economic transformation criterion.

Level of social inclusion in the strongest 49 economies

high

low

average

9.59.58.58.08.09.08.08.58.58.5

10.010.010.010.010.09.09.08.08.08.0

Level of socioeconomic development

Democracies generally show a higher level ofsocioeconomic development and a more extensiveset of social welfare services than autocracies.However, if we factor out defective democracies andcompare them to autocracies, we see a slightly high-er level of socioeconomic development in the latterand more comprehensive social welfare services inthe former.

Social achievements of strong economies

Of the 49 countries showing major economicgrowth in the last two years, 15 are led by autocraticregimes and 34 by democratic regimes. Here aswell, the democracies in this group show, on aver-age, a higher level of socioeconomic developmentthan the autocracies, and their economies havemore extensive sociopolitical safeguards. However,the defective democracies within this group ofstrong economies cannot match their autocraticcounterparts in both socioeconomic developmentand social welfare.

Consolidating democracies with strong econom-ic growth, particularly Bulgaria, Latvia, Mauritius,Poland, Romania and the Czech Republic, have beenmost effective in using the favorable economic cli-mate to strengthen their social safety nets. Of alldefective democracies with improved performancescores, only Turkey has been able to boost its levelof socioeconomic development.

5.55.55.55.57.56.56.56.06.05.55.05.04.54.54.04.05.55.04.04.04.5

7.06.06.06.05.05.05.05.05.05.05.05.05.05.05.05.04.04.04.03.02.0

Czech RepublicSloveniaTaiwanSingaporeSouth KoreaSlovakiaPolandEstoniaLithuaniaUruguay

ChileCosta RicaLatviaMauritiusBulgariaCubaRomaniaMalaysiaArgentinaOmanUnited Arab EmiratesBahrainBrazilLibyaPanamaSri LankaThailandTurkey

KuwaitColombiaMexicoRussiaTunisiaBotswanaSouth AfricaKazakhstanUkraineGhanaJordanVietnamChinaDominican RepublicIndiaSaudi ArabiaArmeniaPeruEl SalvadorHondurasNigeria

Political Management Regional Overviews

Regional Overviews 1514 Regional Overviews

Latin America and the CaribbeanIn Latin America and the Caribbean, democracy

remains relatively stable and economic growthcontinues in most areas. However, strong populistcurrents threaten to undermine these trends.Politically, the subcontinent’s countries are driftingapart from each other. In contrast to the four rela-tively consolidated democracies of Argentina,Chile, Uruguay and Brazil, political managementhas suffered marked regression elsewhere on thesubcontinent, most notably in the Andean states andVenezuela, and thus weakened democratic institu-tions. The erosion of several states’ monopoly on theuse of force is another increasing problem in theregion that can be attributed to the growing drugtrade and its twin attendants of organized crime andcorruption.

AfricaReform management in Africa is confronted

with the most persistent structural constraints inthe world; extreme poverty, a lack of education,infrastructural deficits and insufficient statenesscontinue to block transformation in several of thecontinent’s states. Whereas many of these countriesare held back by adverse conditions, governmentsin countries such as Eritrea, Chad or Zimbabwedecidedly refuse to engage in any form of liberaliza-tion. But there are also decision makers on the con-tinent who have successfully pursued long-termstrategies of change. In South and East Africa, polit-ical leaders in Botswana, Mauritius, South Africaand Madagascar continue to build upon their suc-cesses in transformation. In West and CentralAfrica, Ghana is the front-runner in good gover-nance, with Mali, Benin and Senegal also showinggood management.

Eastern Central and Southeastern EuropeMarket-based democracy has been further con-

solidated throughout East-Central and SoutheastEurope, and most of the region’s states have demon-strated generally adept political management. TheEuropean Union is both a goal and an agent ofchange for transformation processes throughout theregion. Bulgaria’s and Romania’s entry into theEuropean Union on 1 January 2007 is a marker ofboth states’ achievements in transforming theircountries since the end of the Cold War. With theexception of Bosnia-Herzegovina, the states ofSoutheast Europe continue to make their waytoward EU membership. However, a surge in polar-ization and populism following EU accession haseroded political management in several East-CentralEuropean states, as Poland most strikingly demon-strates.

Middle East and North AfricaStagnating political transformation in the

Middle East and North Africa is a manifestation ofcontinued autocratic rule and the absence of sus-tainable political reforms. Free parliamentary elec-tions in Lebanon, women’s suffrage in Kuwait andthe political liberalization of Egypt’s government inthe run-up to parliamentary elections raised hopesof an emergent “Arab Spring” throughout the region.However, these hopes have been dashed. Turkey isthe only state in the region showing comprehensiveprogress made in transformation, which is in part aresult of pressure put on the Turkish governmentwithin the framework of EU expansion talks. Elitesin most of the region’s states are concerned prima-rily with preserving their monopoly on power.Reforms, when implemented, are therefore limitedgenerally to the economic sphere. Islamist move-ments are becoming an increasingly salient mouth-piece for more and more of the disaffected masses.

CIS and MongoliaIn the CIS and Mongolia, countries are drifting

farther apart – politically, economically and socially.Though the expectations pinned on the colored rev-olutions have not been fully met, Georgia’s reformagenda remains the most successful in the entireregion. Developments in Kyrgyzstan and Ukrainealso show slight improvement. Trailing behind therest, Belarus, Turkmenistan and Uzbekistan showno signs of democratization or market economicreform. Political stability and preserving powerremain priorities for the governments of Russia,Kazakhstan and Azerbaijan. Buttressed by continu-ing economic growth, many of these governmentspay mere lip service to democratization efforts.Corruption continues to plague all of the region’scountries. With the exception of Georgia, attemptsto fight corruption have relaxed even further.

Asia and OceaniaIn Asia and Oceania, South Korea and Taiwan

once again outdo the rest in terms of political man-agement, whereas Myanmar and North Korea showno signs of reform. Overall, the tendency to decou-ple market economic from democratic transforma-tion continues throughout most of the region. Rulingelites in countries such as China and Vietnam tendto avoid liberalizing their political systems, focusingtheir aims exclusively on the goals of market eco-nomic transformation. The economic success of thiskind of political management clearly influenceselites in the region’s other countries. On the onehand, increasingly polarized internal tensions inBangladesh, the Philippines and especially Thailandhave been accompanied in recent years by the mili-tary’s enhanced role in these countries. On the otherhand, Nepal’s ruling elite has succeeded in intro-ducing a peace and reconciliation process. India inparticular has demonstrated a major qualitativejump in terms of its political management and thequality of its democracy.

Breakdown of management performance by region

9

8

7

6

5

4

3

2

1

0

Asia and Oceania

AfricaMiddle East and North Africa

Eastern Central andSoutheastern Europe

CIS andMongolia

Latin America andthe Caribbean

Aggregate score,

Management Performance

Steering Capability

Resource Efficiency

Consensus-Building

International Cooperation

Turkey

Mauritius

Georgia

Somalia

Turkmenistan

Global average Management Performance

Highest score Management Performance

Lowest score Management Performance

Chile Estonia

Iraq Venezuela

Bosnia a.Herzegovina

Myanmar

South Korea

5 criteria on the status of political transformation

The Status Index explores the state of development achieved by 125 countries on their way to democracyunder the rule of law and a market economy flanked by sociopolitical safeguards, as of spring 2007. Status Indexscores result from the combined scores given for the status of political and economic transformation.

Polititical Transformation

Criteria Status Index 17 16 Criteria Status Index

The Status Index

Status Index – Democracy

There are five criteria based on a total of 18questions used in assessing the state of politicaltransformation. In contrast to other, more narrowdefinitions of democracy that focus primarily onbasic civil rights and free elections, the BTI’s con-cept of democracy casts a wider net and includescriteria such as the rule of law and the separation ofpowers. The BTI thus asks to what extent the demo-

cratic system is consolidated in terms of its accept-ance, structures of representation and its politicalculture. In so doing, the BTI shows whether, and towhat extent, the ground rules for democracy areanchored in a society.

Objectives

Questions

Rule of Law

State powers check and balance oneanother and ensure civil rights.

1. To what extent is there a working separation of powers (checks and balances)?

2. To what extent does an independent judiciary exist?

3. To what extent are there legal or political penalties for officeholders who abuse their positions?

4. To what extent are civil liberties guaranteed and protected, and to what extent can citizens seek redress for violations of these liberties?

Stability of Democratic Institutions

Democratic institutions are capable of performing, and they are adequately accepted.

1. Are democratic institutions, including the administrative and judicial systems, capable of performing?

2. To what extent are democratic institutions accepted or supported by the relevant actors?

Political and Social Integration

Stable patterns of representation exist formediating between society and the state;there is a consolidated civic culture.

1. To what extent is there a stable, moderate and socially rooted party system to articulate and aggregate societal interests?

2. To what extent is there a network of cooperative associations or interest groups to mediate between society and the political system?

3. How strong is citizen consent to democratic norms and procedures?

4. To what extent have social self-organization and the construction of social capital advanced?

Stateness

There is clarity about the nation’s existenceas a state, with adequately established anddifferentiated power structures.

1. To what extent does the state’s monopoly on the use of force cover the entire territory?

2. To what extent do all relevant groups in society agree about citizenship and accept the nation-state as legitimate?

3. To what extent are the state’s legiti-macy and its legal order defined with-out interference by religious dogmas?

4. To what extent do basic administrativestructures exist?

Political Participation

The populace determines who rules, and ithas other political freedoms.

1. To what extent are rulers determined by general, free and fair elections?

2. To what extent do democratically elected leaders have the effective power to govern, or to what extent are there veto powers and political enclaves?

3. To what extent can independent political and/or civic groups associate and assemble freely?

4. To what extent can citizens, organizations and the mass media express opinions freely?

7 criteria on the status of economic transformation

Criteria Status Index 19 18 Criteria Status Index

Economic Transformation

Status Index – Market Economy

There are seven criteria based on a total of 14questions used in assessing the state of economictransformation. The BTI concept of a market economyflanked by sociopolitical safeguards encompassesissues such as a framework of competition andprivate property rights, as well as social responsi-

bilty, equal opportunity and sustainability. In BTIterms, comprehensive development should not onlylead to economic growth; it should also fight pover-ty effectively and expand the freedom of choice andaction to as many citizens as possible.

Objectives

Questions

Private Property

There are adequate conditionsto support a functional privatesector.

1. To what extent do govern-ment authorities ensure well-defined rights of private property and regulate the acquisition of property?

2. To what extent are privatecompanies permitted? Are state companies under going a process of privatization consistent with market principles?

Welfare Regime

There are viable arrangementsto compensate for the socialcosts of the capitalist economicsystem.

1. To what extent do social safety nets exist to com-pensate for poverty and other risks such as old age,illness, unemployment or disability?

2. To what extent does equality of opportunity exist?

Economic Performance

The economy’s performancepoints to solid growth.

1. How does the economy, measured in quantitative indicators, perform?

Sustainability

Economic growth is balanced,environmentally sustainableand future-oriented.

1. To what extent are environmental concerns taken into account in both macro- and micro-economic terms?

2. To what extent are there solid institutions for basic, secondary and tertiary education, as well as for research and develop-ment?

Level of Socioeconomic Development

In principle, the country’s levelof development permits adequate freedom of choice for all citizens.

1. To what extent are signi ficant parts of the population fundamentally excluded from society due to poverty and inequality combined (income gaps, gender, education, religion, ethnicity)?

Organization of the Market and Competition

There are clear rules of thegame for stable, market-basedcompetition.

1. To what level have the fundamentals of market-based competition developed?

2. To what extent do safe-guards exist to prevent the development of economic monopolies and cartels?

3. To what extent has foreigntrade been liberalized?

4. To what extent have a solid banking system and a capital market been established?

Currency and Price Stability

There are institutional or political precautions to control inflation sustainably, togetherwith an appropriate monetaryand fiscal policy.

1. To what extent does the country pursue a consistent inflationpolicy and an appropriate foreign exchange policy? Is there an independent central bank?

2. To what extent do the government’s fiscal and debt policies support macroeconomic stability?

4 criteria on the quality of political management

Consensus-Building

The government establishes a broad consensus on reform with other actors insociety without sacrificing its reform goals.

1. To what extent do the major political actors agree on a market economy and democracy as strategic, long-term aims?

2. To what extent can the reformers exclude or co-opt anti-democratic veto actors?

3. To what extent can the politicalleader ship manage political cleavages so that they do not escalate into irreconcilable conflicts?

4. To what extent dos the political leadership enable the participation of civil society in the political process?

5. To what extent can the political leadership bring about reconciliation between the victims and perpetrators of past injustices?

International Cooperation

The country’s political actors are willing to cooperate with outside supporters andorganizations.

1. To what extent does the political leadership use the support of inter- national partners to improve its domestic reform policies?

2. To what extent does the government act as a credible and reliable partner in its relations with the international community?

3. To what extent is the political leadership willing to cooperate with neighboring countries in regional and international organizations?

Level of Difficulty

Assesses the structural conditions thatinfluence the scope of political action.

1. To what extent do structural difficulties constrain the political leadership’s governance capacity?

2. To what extent are there traditions of civil society?

3. How serious are ethnic, religious and social conflicts?

4. Per capita GNI PPP (2005)

5. UN Education Index as a measure of the educational level

6. Stateness and Rule of Law (average of BTI criteria values)

Criteria Management Index 21 20 Criteria Management Index

The Bertelsmann Transformation Index’s key innovation is its focus on the steering and management ofdevelopment and transformation processes. The Index reviews and evaluates the reform activities of politicaldecision makers, thus providing valuable information on the key factors of success and failure for states on theirway to a market-based democracy. Governments must be determined in pursuing their goals, they must be pru-dent and effective in using their resources, and they must combine the capacity to govern with consensus-build-ing while cooperating reliably with neighboring states and external support organizations. The BTI is the onlyranking worldwide to focus so thoroughly on political leaders’ management performance with self-collected data.

The Management Index

There are four criteria based on 14 questionsused in assessing political management. Based onsix further questions, the Level of Difficulty criteri-on accounts for the fact that the quality of transfor-mation management is shaped by each state’sunique structural conditions. The more adverse astate’s structural conditions and the more limitedits available resources, the higher good governanceis scored in the Management Index.

Objectives

Questions

Steering Capability

The political leadership manages reform effectively and can achieve its policy priorities.

1. To what extent does the political leadership set and maintain strategic priorities?

2. How effective is the government in implementing reform policy?

3. How flexible and innovative is the political leadership? Does it learn from past errors?

Resource Efficiency

The government makes optimum use of available resources.

1. To what extent does the government make efficient use of available eco- nomic and human resources?

2. To what extent can the government coordinate conflicting objectives into a coherent policy?

3. To what extent can the government successfully contain corruption?

The Bertelsmann Transformation Index

Review 4: Final scores reviewed and approved by the BTI Board

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52 Questions, qualitative and quantitative evaluation by country experts (criteria evaluation base)

Analytic Dimensions (based on mean value of aggregated criteria results)

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Review 1: Comments and scores given by a second expert from the country in question

Review 2: Adjustment of scores within regions

Review 3: Adjustment of scores in international comparison

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17 Criteria (based on mean value of scores given for each question)

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125 Countries

17 Criteria

52 Indicators

6500 individual scores total

Economic Transformation

Level of Socioeconomic DevelopmentMarket Organization Currency and Price StabilityPrivate PropertyWelfare RegimeEconomic PerformanceSustainability

Political Transformation

StatenessPolitical ParticipationRule of LawStability of Democratic InstitutionsPolitical and Social Integration

Management Performance

Steering CapabilityResource EfficiencyConsensus-BuildingInternational Cooperation

Level of Difficulty

Management IndexStatus Index

StatusMarket Economy

Status Democracy

TransformationManagement

weighted withLevel of Difficulty

BTI Board

BTI Board 23 22

Country reports detailing the state of develop-ment, management and the landscape of problemsspecific to a given country form the backbone of theBTI. Using a standardized codebook, experts foreach of the 125 countries examine the extent towhich a total of 17 criteria are fulfilled, providingscores as well as written assessments for each. Eachcountry report substantiates the scores given and isavailable online. A second expert, generally fromthe country in question, reviews the scores andassessments given for each report. To ensure theconsistency of 52 individual scores, each country’sscores then undergo a regional and inter-regionalcomparison and calibration process, after whichthey are subjected to final review and approval bythe BTI Board – a team of esteemed scholars and

development professionals. The BTI’s standardizedanalysis allows for a targeted comparison of reformpolicies. Indeed, its unique body of data aids inassessing and comparing the successes and failuresof developing and transformation states.

To keep track of current developments andensure data quality, the BTI is published every twoyears. The continuous evaluation of transformationand development makes it possible to assessobserved trends and establish the results of trans-formation strategies. Now in its third edition, theBTI can expand the body of knowledge on politicalmanagement for decision makers and the externalorganizations supporting them.

Dr. Franz-Lothar Altmann Head, Research Section Balkan, German Institute for International and Security Affairs, Stiftung Wissenschaft und Politik (SWP), Berlin; Associate Professor, University of Bucharest

Dr. Matthias Basedau Head, Research Program Violence, Power and Security; Senior Research Fellow,GIGA Institute of African Affairs (IAA), Hamburg

Prof. Dr. Klaus Bo demer Senior Professorial Fellow, GIGA Institute of Latin American Studies (ILAS), Hamburg

Dr. Mar tin Bru sis Senior Research Fellow, Center for Applied Policy Research (C·A·P), Ludwig Maximilian University, Munich

Prof. Dr. Aurel Croissant Institute of Political Science, Ruprecht Karl University, Heidelberg

Sabine Donner Project Manager, International Relations Program, Bertelsmann Stiftung, Güters loh

Dr. Bernd Eisenblätter Managing Director, Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH, Eschborn

Dr. Hauke Hart mann Project Manager, International Relations Program, Bertelsmann Stiftung, Gütersloh

Prof. Dr. Se bastian Heilmann Director, Center for East Asian and Pacific Studies; Chair of Comparative Government, University of Trier

Olaf Hillenbrand Senior Research Fellow, Center for Applied Policy Research (C·A·P), Ludwig Maximilian University, Munich

Josef Janning Member of the Management Committee and Head, International Relations Program, Bertelsmann Stiftung, Gütersloh

Dr. Eberhard Kienle Directeur de Recherche, Centre Nacional de la Recherche Scientifique (CNRS), Paris; Program Officer, Governance and Civil Society, Ford Foundation, Cairo

Bernd Kuzmits Research Fellow, Center for Development Research (ZEF), Rheinische Friedrich Wilhelm University, Bonn

Prof. Dr. Rolf J. Lang hammer Vice-President, Kiel Institute for the World Economy

Prof. Dr. Wolfgang Merkel Director, Research Unit Democracy: Structures, Performance, Challenges, Social Science Research Center Berlin (WZB); Institute for Social Sciences, Humboldt University, Berlin

Prof. Dr. Dirk Messner Director, German Develop ment Institute, Bonn

Felix Neu gart Director, North Africa and Middle East Department, Association of German Chambers of Industry and Commerce (DIHK), Berlin

Prof. em. Dr. Franz Nuscheler Senior Fellow, Institute for Development and Peace (INEF), Gerhard Mercator University, Duisburg

Prof. Dr. Hans-Jürgen Puhle Director, Institute of Political Science, Johann Wolfgang Goethe University, Frankfurt am Main

Prof. Dr. Sieg mar Schmidt Political Science Department, Institute for Social Sciences, University of Koblenz-Landau

Prof. Dr. Hans-Henning Schröder Research Centre for Eastern European Studies, University of Bremen

Dr. Tobias Schumacher Deputy Manager, EuroMeSCo; Senior Research Fellow, Instituto de Estudos Estratégico e Internacionais (IEEI), Lisbon

Prof. Dr. Udo Steinbach Director, GIGA Institute of Middle East Studies (IMES), Hamburg

Dr. Peter Thiery Senior Research Fellow, Center for Applied Policy Research (C·A·P), Ludwig Maximilian University, Munich

Prof. Dr. Uwe Wagschal Institute of Political Science, Ruprecht Karl University, Heidelberg

Prof. Dr. Werner Weidenfeld Director, Center for Applied Policy Research (C·A·P), Ludwig Maximilian University, Munich

Prof. em. Dr. Helmut Wiesenthal Institute for Social Sciences, Humboldt University, Berlin