The Inclusive Sustainable Transformation Index

In this paper, we put forth an index of Inclusive Sustainable Transformation that captures the extent to which a country has developed a modern industry or services-based economy that at the same time protects the environment and is gender inclusive. This index distinguishes itself from other indicators that track the structural characteristics of the economy by ensuring that the comparisons between countries account for differences in the level of development, in line with New Structural Economics thinking. The index evaluates how well a country scores given its available resources. In addition, by addressing data availability problems using multiple imputation techniques, the index is able to compare performances on a wide range of topics for almost 200 countries over 25 years, including a large group of developing countries that are often left out. In addition to monitoring the progress made towards the establishment of an inclusive and environmentally friendly, modern economy, the index is a useful tool for policy makers and analysts. By decomposing the total score back into its components, it can help identify areas that require additional attention, as well as ‘best practices’ in countries at similar levels of development.