Study ranks Czech Republic first among transforming countries

Germany’s Bertelsmann Foundation has ranked the Czech Republic first among transforming countries, ahead of Slovenia, Estonia, and Taiwan, in an important study conducted over the last two years. The foundation’s so-called Transformation Index rated a total of 125 states, taking into account both political and economic criteria.

Many countries finished high on the Bertelsmann Foundation’s Transformation Index but none finished ahead of the Czech Republic. The foundation’s extensive study of transforming and developing countries evaluates a broad range of political and economic criteria to ultimately rank levels of democracy, market economies and political management in individual countries. The foundation’s Hauke Hartmann explains reasons why the Czech Republic improved from a third-place ranking in 2006, to 1st this time around.

“As far as the political side is concerned, there were improvements over the last two years with regards to the protection of civil rights and another element was the continuing consolidation of Czech Parliamentarianism. With regard to the economy, there was the continuing output strength of the Czech economy and a relatively high GDP per capita, which went up substantially.”

But some have criticised the study’s findings, taking issue with the Czech Republic being included in a study of transforming countries in the first place. Markéta Šichtařová is a leading Czech economist:

Markéta Šichtařová
“In my opinion, the Czech Republic is not a transformation country anymore. Its financial market is very developed, it left Communist Czechoslovakia behind almost 20 years ago, it is a member of the European Union, our interest rates are lower than in the Euro zone. In no regard does it fulfil a general image of a transformation country anymore.”

In Markéta Šichtařová’s view, mixing political and economic factors in rating a country also runs a risk of distorting the overall picture:

“If the study was made by a different using slightly different ‘weights’, the result would probably be very different: in my opinion there is just one and only one measurement for ranking a country’s economic success: the amount of foreign investment, the number of foreign investors a country is able to attract and the number of exports. The higher volume of foreign trade, the more successful the country – these figures are unambiguous.”

Hauke Hartmann of the Bertelsmann Foundation acknowledges that it is almost certainly the last time the Czech Republic will be included in the Transformation Index, but he defends the study’s balancing of political and economic factors to get a broader overall view:

“This is probably the last time that the Czech Republic is listed in an index basically dealing with developing and transitional countries, when clearly the Czech Republic is no longer a transition country but is a member of a group of firmly consolidated democratic regimes with an advanced market economy. When we are looking at transforming status we believe it is important to have both the political and economic dimension in mind.”

Many in the Czech Republic still view the country’s top finish in the Bertelsmann Foundation’s study as noteworthy. But most also add that much still needs to be done: on Monday Finance Minister Miroslav Kalousek and representatives of industry and trade pointed to the importance of building further on current reforms if the Czech Republic is to continue as a “success”.