Around the world, under widely differing conditions and with varying degrees of success, reform-oriented groups are struggling to democratize their countries and to strengthen the market economy. The peaceful transition from authoritarian regimes poses enormous challenges for citizens and politicians alike. The public, however, has generally become aware only of spectacular events within the transition process. Until now, there has been no systematic analysis of transformation processes to aid in learning from past experiences and errors. The Bertelsmann Transformation Index (BTI) serves to fill this knowledge gap. Comparing the status of democracy and market economy on an international basis (Status Index), the BTI also provides comprehensive data on the quality of political management in 119 transition countries from 2003 to 2005 (Management Index). The detailed country reports are documented on the enclosed CD-ROM.