The Inclusive Sustainable Transformation Index

In this paper, we put forth an index of Inclusive Sustainable Transformation (IST) that captures the extent to which the country has developed a modern industry or servicesbased economy that at the same time protects the environment and is gender inclusive. This index distinguishes itself from other indicators of (industrial) development by accounting for the level of development when comparing the structural characteristics of countries, in line with New Structural Economics. In other words, it evaluates how well the country scores given its available means. In addition, by addressing availability problems using multiple imputation techniques, it is able to compare the performance on a wide range of topics for almost 200 countries over 25 years; including a large group of developing countries that are otherwise often left out. In addition to monitoring the progress made towards the establishment of an inclusive and environmental-friendly modern economy, the index can also serve as a useful tool for policy makers and analysts. By decomposing the score back into its components, the index can help identify which areas require additional attention, as well as identify the ‘best practice’ over all countries with similar level of development.