2016 Index of Economic Freedom

Bangladesh

overall score53.3
world rank137
Rule of Law

Property Rights20.0

Freedom From Corruption25.0

Limited Government

Government Spending93.6

Fiscal Freedom72.7

Regulatory Efficiency

Business Freedom52.6

Labor Freedom62.5

Monetary Freedom68.2

Open Markets

Trade Freedom63.6

Investment Freedom45.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 158.2 million
  • GDP (PPP):
    • $533.7 billion
    • 6.1% growth
    • 6.2% 5-year compound annual growth
    • $3,373 per capita
  • Unemployment:
    • 4.3%
  • Inflation (CPI):
    • 7.0%
  • FDI Inflow:
    • $1.5 billion
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Bangladesh has shown remarkable macroeconomic resilience, and its economy has grown steadily over the past five years. Nonetheless, overall entrepreneurial 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 Asia–Pacific Region
  • Notable Successes: Management of Public Finance
  • Concerns: Rule of Law and Open Markets
  • Overall Score Change Since 2012: +0.1

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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 world’s 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.

Rule of LawView Methodology

Property Rights 20.0 Create a Graph using this measurement

Freedom From Corruption 25.0 Create a Graph using this measurement

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.

Limited GovernmentView Methodology

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 EfficiencyView Methodology

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 MarketsView Methodology

Bangladesh’s 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 state-owned enterprises distort the economy. Despite ongoing reform of the financial sector, government ownership and interference remain considerable, undermining much-needed increases in efficiency.

Country's Score Over Time

Bar Graph of Bangladesh  Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Bangladesh  to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
2Singapore87.8-1.6
3New Zealand81.6-0.5
4Australia80.3-1.1
5Taiwan74.7-0.4
6Japan73.1-0.2
7South Korea71.70.2
8Malaysia 71.50.7
9Macau70.1-0.2
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
12Kazakhstan63.60.3
13Samoa63.51.6
14Philippines63.10.9
15Vanuatu60.8-0.3
16Azerbaijan60.2-0.8
17Sri Lanka59.91.3
18Tonga59.60.3
19Kyrgyz Republic 59.6-1.7
20Bhutan59.52.1
21Indonesia59.41.3
22Mongolia59.40.2
23Fiji58.8-0.2
24Cambodia57.90.4
25India56.21.6
26Pakistan 55.90.3
27Vietnam542.3
28Maldives53.90.5
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
31China52-0.7
32Micronesia51.82.2
33Tajikistan51.3-1.4
34Nepal50.9-0.4
35Laos49.8-1.6
36Burma48.71.8
37Solomon Islands470.0
38Kiribati46.2-0.2
39Uzbekistan46-1.0
40Timor-Leste45.80.3
41Turkmenistan41.90.5
42North Korea2.31.0
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