Friday, February 22, 2008

Bertelsmann Transformation Index | Using a New Interactive Tool to Analyze the Caucasus

Many of our readers know of both our quibbles with indexes, but also our steadfastness when it comes to posting about them. The Bertelsmann Foundation released its trademark index, the Bertelsmann Transformation Index (BTI) (PDF), which according to its producers, is "the global ranking of the quality of democracy, the market economy and political leadership in 125 developing and transformation countries."

The BTI itself is a the example of what political scientists would call non-parsimonious. The BTI is a combination of two sub-indexes, which are in themselves made up of a wide number of indicators. These indicators in turn are based on an even greater number of variables. I don't want to bore you, so I won't go into details but refer you to the methodological report (which does a great job of documenting their approach). To boot, each of the 125 countries has a 25 page report.

However, despite its lack of parsimony, the BTI provides several good ways of visualizing the developments in the Caucasus -- though, as always, indices have their limits.

Scales run from 0 - 10, with 10 denoting the highest score. Georgia ranks 6.60 (38th) on the Status Index and 6.36 on the Management index (23rd). It gets strong upward ratings in the trends as well. Armenia follows behind Georgia with 6.14 (41stt) and 5.41 (56th). However, it shows no changes, in terms of trends. Azerbaijan lags behind with a score of 4.51 (87th) and 3.83 (99th) and also shows no significant change in terms of the trends.

The next three graphs show the seventeen main indicators that make up the ranking divided into the "Status" and "Management" parts broken down by country.

One way of simplifying and comparing the information in the BTI is a unique interactive tool, called the transformation atlas, which can be downloaded from the Bertelsmann website. While at first slightly difficult to interpret, the atlas provides a good visualization of individual countries, and tells a convincing story about many of the countries development problems. The averages, however, are less useful.

This image shows Georgia compared to Romania (Georgia in blue). The images shows neatly how uneven Georgia's development has been in comparison with a recent EU accession state like Romania. The places where the area in blue is small denotes a lower score. Georgia diverges significantly from Romania here on the key issues of rule of law, socioeconomic development, welfare regime, political and social integration and sustainability of transformation, among others. Since the sustainability variable pertains to the quality of education and research institutions in the country and environmental protection, we agree that Georgia needs more work on these areas. All of these areas sync well with what commentators have noted to be many of Georgia's shortcomings. Georgian does notably well on resource efficiency and steering capability, which address the ability to implement change -- something Georgians have certainly been doing.

The Armenia comparison shows the change over time function. What stands out in the Armenian case, as compared to the Georgian or even the Azerbaijani is the lack of change over time, particularly since 2003, where much greater change is noticeable in other countries in the region. Of interest here is that there has been no change in the socioeconomic ranking despite Armenia's status as the "Caucasian Tiger." However, the socioeconomic development indicator is more concerned with income gaps across the population and social exclusion, and all of the South Caucasus countries do poorly -- scoring 4 across the board.

A comparison of Azerbaijan and Kazakhstan yield interesting findings related to oil rich countries. The first obvious fact is that Azerbaijan looks theoretically very similar to Kazakhstan. However, Azerbaijan finds itself at a slightly lower level than Kazakhstan. Unfortunately, multiple comparisons cannot be carried out at the same time, so we cannot examine this longitudinally with multiple countries. Unsurprisingly, Azerbaijan scores high on stateness and economic performance and other economy related variables and extremely low on indicators related to democracy (upper left corner). Surprisingly Azerbaijan has higher than expected scores (4) on the rule of law.

We encourage our readers to explore more on their own!

1 comment:

HansG said...

One should note that it seems the research was completed before November 07. While an excellent summary, some small items are open for discussion. For example, some people may argue that it probably underrepresents some of the concerns with property rights in Georgia.