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BANGLADESH

Economic Freedom Score


25

World Rank:

137

Regional Rank:

29

Least
free 0

has shown remarkable macroeconomic


Btheangladesh
resilience, and its economy has grown steadily over
past five years. Nonetheless, overall entrepreneur-

50

75
Most

100 free

53.3

Freedom Trend
56

ial activity is disadvantaged by an uncertain regulatory


environment, poor infrastructure, and the absence of
effective long-term institutional support for private-sector development.
ECONOMIC FREEDOM SNAPSHOT
2016 Economic Freedom Score: 53.3 (down 0.6 point)
Economic Freedom Status: Mostly Unfree
Global Ranking: 137th
Regional Ranking: 29th in the AsiaPacific Region
Notable Successes: Management of Public Finance
Concerns: Rule of Law and Open Markets
Overall Score Change Since 2012: +0.1
Economic development remains hampered by the fragile rule of law. Corruption and marginal enforcement of
property rights have driven people and enterprises out of
the formal sector. The governments inability to provide
basic public goods further limits opportunities for business development and job growth.
BACKGROUND: Sheikh Hasina was reelected prime minister in January 2014 in an election marred by an opposition
boycott. A year later, when anti-government demonstrations
and a transport blockade fueled violence that killed over 120,
the government jailed over 7,000 opposition members. In
2014, the tribunal set up to investigate human rights violations committed during the 1971 war for independence carried out death sentences against Islamist leaders. Despite a
decade of economic and social gains for much of the population, Bangladesh remains one of the worlds poorest nations.
Garment manufacturing accounts for over 90 percent of
export earnings. The April 2013 collapse of the Rana Plaza
garment factory, which killed over 1,000 people, focused
international attention on working conditions and labor and
safety standards.
How Do We Measure Economic Freedom?

See page 467 for an explanation of the methodology


or visit the Index Web site at heritage.org/index.

55
54
53
52
51

2012

2013

2014

2015

2016

Country Comparisons
53.3

Country
World
Average

60.7

Regional
Average

59.0

Free
Economies

83.9
0

20

40

60

80

100

Quick Facts
Population: 158.2 million
GDP (PPP): $533.7 billion
6.1% growth in 2014
5-year compound annual growth 6.2%
$3,373 per capita
Unemployment: 4.3%
Inflation (CPI): 7.0%
FDI Inflow: $1.5 billion
Public Debt: 33.9% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.

109

BANGLADESH (continued)
THE TEN ECONOMIC FREEDOMS
Score

RULE OF
LAW

Property Rights
Freedom from Corruption

Country

World Average

20.0
25.0
0

20

40

60

80

Rank

1Year
Change

140th
151st

0
2.0

100

Endemic corruption and criminality, weak rule of law, limited bureaucratic transparency, and
political polarization continue to undermine government accountability. Patchy or biased
enforcement and subversion of the judicial process weaken anti-corruption efforts. The judiciary is insufficiently separated from the executive. Contract enforcement and dispute settlement procedures are inefficient, and property laws are antiquated.
Fiscal Freedom 72.7
GOVERNMENT
Government Spending 93.6
SIZE

132nd
7th
0

20

40

60

80

0
+1.6

100

The top income tax rate is 25 percent, and the top corporate tax rate is 45 percent. Other taxes
include a value-added tax that is currently being reformed. The overall tax burden equals 9 percent of GDP. Government spending amounts to 14.6 percent of total domestic output, and public debt equals about 34 percent of GDP. A large bureaucracy hinders government effectiveness.

REGULATORY
EFFICIENCY

Business Freedom
Labor Freedom
Monetary Freedom

52.6
62.5
68.2

145th
80th
157th
0

20

40

60

80

9.6
1.2
+0.5

100

Business start-up has become simpler, with no minimum capital required, but obtaining necessary permits remains time-consuming. The labor laws amended in 2013 came into effect
in 2015. The state-owned Bangladesh Power Development Board, which is responsible for
electricity generation and distribution, faces ongoing financial difficulties as it continues to
purchase electricity at higher prices than it charges the public.

OPEN
MARKETS

Trade Freedom
Investment Freedom
Financial Freedom

63.6
45.0
30.0

156th
124th
132nd
0

20

40

60

80

+4.6
0
0

100

Bangladeshs average tariff rate is a relatively high 10.7 percent. Tariffs are a significant source
of government revenue. Most sectors of the economy are open to foreign investment, but stateowned enterprises distort the economy. Despite ongoing reform of the financial sector, government ownership and interference remain considerable, undermining much-needed increases
in efficiency.

Long-Term Score Change (since 1995)


RULE OF LAW
Property Rights
Freedom from
Corruption

110

10.0
+15.0

GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending

+28.7
+2.1

REGULATORY
EFFICIENCY

OPEN MARKETS

Business Freedom +12.6


Labor Freedom
1.6
Monetary Freedom 4.7

Trade Freedom
+63.6
Investment Freedom 5.0
Financial Freedom
0

2016 Index of Economic Freedom