Where is economic freedom?
Special Correspondent: Bangladesh after 52 years of independence, has experienced an economic deadlock due to the covid-19 impact, Russia-Ukraine war and some internal budgetary mismatch. The high ambitious budget and frequent borrowing from the banking net have kept the country into crisis.
A five-year trend of slowly expanding economic freedom has been broken as Bangladesh slipped 17 positions in the 2022 Index of Economic Freedom, released by The Heritage Foundation in February this year.
Bangladesh was ranked 137th freest economy among 177 countries in 2022. It was in the 120th position in 2021, 122nd in 2020, 121st in 2019, and 128th in both 2018 and 2017.
The country’s economic freedom score was 52.7 out of 100 in the 2022 index – a loss of 2.3 points from its score of 55 in the 2017 index. Consequently, it has fallen into the lower half of the “mostly unfree” category.
Bangladesh ranked 29th among 39 countries in the Asia-Pacific region this year, and its overall score of 52.7 was below the regional (58.5) and world (60) average.
The US-based think-tank evaluated countries based on four key aspects of the economic and entrepreneurial environment – rule of law, government size, regulatory efficiency and open markets – over which governments typically exercise policy control.
In assessing conditions in these four categories, the index measures 12 specific components: property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labour freedom, monetary freedom, trade freedom, investment freedom, and financial freedom.
Why ranking dropped
Regarding Bangladesh, the report said, “Scores for tax burden and government spending are excellent, but the country lags in rule of law and labour freedom.”
The country performed poorly in rule of law, one of the four key aspects, as it scored 36.3, 28.1, and 22.2 in property rights, judicial effectiveness, and government integrity sub-factors respectively.
“Enforcement of property rights is uneven. Poor record-keeping systems can complicate land and property transactions. The feeble judiciary is slow and lacks independence,” the report said.
Bangladesh’s labour freedom score fell significantly from a record high of 68.8 in 2021 to a record low of 36.6 in 2022, according to The Heritage Foundation.
Labour freedom – one of the three sub-factors of regulatory efficiency – measures how a labour market’s legal and regulatory framework deals with concerns of minimum wage, associational rights, laws inhibiting layoffs, labour productivity, etc.
The report said even though low-skilled labour is cheap and abundant, the country’s productivity is low. It further said, “Enforcement of labour law is lax.”
Bangladesh 4th most economically free nation in S Asia
Bangladesh has been ranked the fourth most economically free nation in the 2022 index – lagging behind Bhutan, India and Sri Lanka and marching ahead of others including Nepal, Pakistan and the Maldives.
Last year, Bangladesh was the second most economically free nation in the region, staying only behind Bhutan.
Bhutan at the 94th position is the only South Asian country with a global ranking below 100 this year. The country’s economic freedom score was 59.3, making its economy once again the freest in South Asia.
India stands second in the region and 131st globally with a score of 53.9. It is followed by Sri Lanka which scored 53.3 and placed 132nd globally.
The Maldives, Pakistan and Nepal, placed at 161st, 153rd, and 148th positions respectively, were far behind Bangladesh in the global ranking on economic freedom.
This year’s index reveals a global economy that, taken as a whole, remains “moderately free.”
However, the global average economic freedom score is currently 60 – a loss of 1.6 points from the 2021 Index’s score of 61.6.
The index editors lay the blame for declining economic freedom around the world on one major factor – unwise policies addressing the Covid-19 pandemic.
Of the 177 economies ranked in the 2022 Index of Economic Freedom, seven including Singapore, Switzerland, Ireland, New Zealand and Luxembourg were considered “free,” as they scored 80 or more.
Meanwhile, 27 countries including Finland, Denmark, South Korea, the United Kingdom, and the United States have earned a designation as “mostly free” by scoring 70.0 to 79.9.
Japan, Malaysia, Thailand, Philippines and Vietnam were among 54 economies classified as “moderately free” with scores ranging from 60.0 to 69.9.
On the other hand, 89 economies received scores below 60 and were rated “mostly unfree” or “repressed.”
North Korea has remained the world’s least economically free nation, followed by Venezuela and Cuba.
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