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Does the increase in social exclusion or its persistence lead to political instability? Two indices published regularly by Bertelsmann Stiftung, a private, independent German foundation and think tank, have started to look at this question. We use a database of the status of political and economic reform and the quality of governance in 128 developing countries (the Transformation Index of the Bertelsmann Foundation—BTI)¹ and an evaluation of Organisation for Economic Cooperation and Development (OECD) country reform and challenges (the Sustainable Governance Indicators—SGI)² that evaluates the governments’ ability to respond to current social, political and economic challenges.

Together, both indices cover policy results and management achievements in 151 countries. They are based on the work of nearly 400 country and regional experts who evaluate political and economic governance, with scores ranging from 1 (very weak) to 10 (very good).³

We have combined the data into three variables for our country set, the first two of which apply to developing and transition countries (BTI scores). We define social inclusion as the level of socioeconomic development (reducing poverty and inequality), the extensiveness of social safety nets (government policies to compensate for social risks and alleviate handicaps), and equal opportunity (the absence of discrimination), political stability (which includes the state monopoly on the use of force), state legitimacy (degree to which the legitimacy of the nation-state is accepted), and conflict intensity (degree of polarization, mass mobilization and political violence). For OECD countries, a slightly different set of SGI scores is introduced under the heading of social justice, which includes poverty prevention, equitable access to education, labor market inclusiveness, social cohesion and nondiscrimination, health, and intergenerational justice.⁴ (Access the full report at www.sgi-network.org.)

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