We understand transformation as comprehensive and politically driven change in which an authoritarian system and a state-dominated or clientelist economic order evolve in the direction of democracy and a market-based economy. However, this implies neither linear, irreversible development nor a predetermined path of transformation, nor does it suggest that there is an ideal sequence of milestones to be passed. A return to authoritarianism and periods of stalling are possible, as are detours and out-of-sync political and economic change processes. Indeed, democracy under the rule of law and a market economy anchored in principles of social justice represent goals, but not necessarily immediate priorities within complex development processes. Many states, in fact, pass through radical, sometimes even revolutionary developmental stages; others have yet to undergo comprehensive systemic change; and some states are, for the moment, not targeting transformation.
The 137 countries surveyed by the BTI exhibit substantial differences with regard to size and economic power, level of socioeconomic development and political culture. In order to draw meaningful comparisons with respect to the state of transformation and the quality of governance, the BTI refers to variables that can be compiled in all countries. These variables – from the monopoly on the use of force and press freedom to bank regulation and education policy, and to the efficiency of resource use and conflict management – are relevant to national governments everywhere. This allows comparisons even between very different states to yield interesting insights into the operability of political institutions and the quality of management in transformation processes.
In the codebook upon which the survey is based, particular care has been taken to formulate questions without cultural or regional bias, thus ensuring their applicability to a broad diversity of states. However, because the BTI refers to nation-state frameworks, transnational developments and regional disparities at the subnational level are addressed only to a limited extent in the country reports and will largely escape quantitative assessment.
The BTI’s normative reference points – democracy under the rule of law and a market economy anchored in principles of social justice – are closely related both functionally and empirically. The high correlation in scores between the BTI’s two dimensions addressing these processes underscores their interrelated nature. Similarly, the fundamental market-economic and democratic institutions are to a large extent interdependent. However, the fact of such interdependencies does not mean there is a predetermined, automatic course of development. Indeed, there is no scholarly consensus on the best path to democracy and a market economy; the focus on the goals of democracy and a market economy therefore implies no sweeping definitions or limitations on the content of reform programs. Nor do we claim to know the optimal sequence of democratic and economic reforms – whether the introduction of the market economy should precede democratization, for example, or vice versa.
Unlike many other research projects, the Transformation Index makes its normative positioning wholly transparent. The BTI holds that certain desires – to have a say in the composition of the government, to be free from arbitrary imprisonment or torture, and to have recourse to independent courts and inalienable rights, for example – are not limited to a particular cultural sphere. Our analysis is also premised on the belief that the aspiration to be free from hunger, poverty and disease is universal, that there is more to economic development than simply solid growth rates and economic freedom, and that social welfare and the sustainability of economic development must be respected. At the same time, the BTI is committed to no particular existing institutional model, such as the German model of the social market economy or specifically European models of constitutional democracy. Rather, the previously mentioned fundamental standards and functions of democracy under the rule of law and a market economy anchored in principles of social justice can be effectively embodied in a variety of ways.
The country reports form the foundation for all the BTI’s evaluations and analyses; their quality is thus crucial for the reliability and validity of its use as a measuring tool. Careful selection of the experts is therefore of particular importance. The Transformation Index has built up a network of 286 experts for 137 countries from leading research institutions and civil society organizations. These experts are chosen largely at the recommendation of the regional coordinators. Along with professional expertise, considerations of independence and impartiality are given particular weight in the selection of country experts.
If a country is classified as an autocracy in the BTI, there are consequences in the evaluation of other democracy-related questions. For instance, if decision-makers are not selected through sufficiently free and fair elections, the effective power to govern does not, by definition, lie in the hands of democratically elected leaders, even if the government is otherwise stable. The performance and acceptance of democratic institutions will be similarly poorly assessed even if recognized and effective institutional structures are in place, as they would lack democratic legitimacy. In the Governance Index, one of the four criteria takes the BTI’s normative goals into account: The “steering capability” criterion consists of questions dealing with the capability of a specific government to set and maintain strategic priorities, implement related reform policies and be flexible and innovative in terms of policy formulation and implementation. In the course of this evaluation, it is considered whether a government pursued both democracy and a market economy as overriding goals; this is done to ensure that effective prioritization, implementation and learning capacity in the service of authoritarian regime consolidation is not rewarded with a positive rating.
Qualitative expert surveys like the BTI always contain a degree of subjectivity. The BTI survey process takes this into account during the preparation of reports and evaluations, as well as during the review of the data. It is designed to minimize subjective factors as far as possible throughout the process. The process of country assessment has both a qualitative and quantitative component, in each case performed by two country experts. As a rule, one foreign and one local expert are involved in the evaluation process; this ensures that both external and internal perspectives are taken into account in the course of assessment and helps counteract subjective influence. In total, 286 experts from leading research institutions around the world contribute to the production of the country reports.
A standardized codebook serves as the foundation of the survey process, providing a single reference framework for the experts when answering the questions. The first expert drafts a detailed report on the basis of the criteria outlined in the codebook, referencing the qualitative indicators associated with each criterion. The second expert reviews, comments on and adds to this country report.
Rankings and users
The high level of aggregation of individual scores and the use of rankings are primarily means of providing orientation and communicating findings to a broader public. Rankings necessarily reduce complexity in order to highlight particular differences between individual countries, call attention to trends in development and make factors key to progress more readily identifiable.
However, the focus on rankings and the isolated consideration of one or only a few questions cannot replace a more thoroughly articulated analysis of a country’s strengths and weaknesses. The BTI’s non-aggregated individual scores as well as the country reports and regional reports – all available online – are therefore indispensable.
Because of its approach and particular focus on governance, the BTI is recognized as one of the world’s premier instruments for the systematic comparison of transformation processes. It is used, for example, by the British, German and U.S. governments as a yardstick in assessing their partner countries. In addition, organizations like the Mo Ibrahim Foundation, Transparency International and the World Bank use it in the course of their own analyses. The BTI has gained wide acceptance in academia and the media, and is also used by reform-oriented civil society groups and politicians worldwide as a tool facilitating critical dialogue.