2013 Index of Economic Freedom


overall score52.6
world rank132
Rule of Law

Property Rights20.0

Freedom From Corruption27.0

Limited Government

Government Spending92.1

Fiscal Freedom72.7

Regulatory Efficiency

Business Freedom68.0

Labor Freedom51.9

Monetary Freedom65.4

Open Markets

Trade Freedom54.0

Investment Freedom55.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 166.7 million
  • GDP (PPP):
    • $282.2 billion
    • 6.1% growth
    • 6.1% 5-year compound annual growth
    • $1,693 per capita
  • Unemployment:
    • 5.0%
  • Inflation (CPI):
    • 10.7%
  • FDI Inflow:
    • $1.1 billion
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Bangladesh’s economic freedom score is 52.6, making its economy the 132nd freest in the 2013 Index. Its overall score has decreased by 0.6 point since last year, reflecting declines in labor freedom and monetary freedom that counterbalance a notable improvement in freedom from corruption. Bangladesh is ranked 28th out of 41 countries in the Asia–Pacific region.

Although Bangladesh has recorded significant increases in economic freedom over the past five years, 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. Poor economic management, worsened by repeated political crises, has severely constrained economic dynamism and exacerbated persistent poverty.

Despite some progress in streamlining business regulations, entrepreneurial activity is hampered by an uncertain regulatory environment and the absence of effective long-term institutional support for private-sector development. The government’s inability to provide basic public goods further limits economic opportunities for business development and job growth.



Islamist extremist groups threaten Bangladesh’s democracy and pluralist traditions, but the current government, led by Prime Minister Sheikh Hasina Wajed, has taken steps to curb their activities. The opposition Bangladesh National Party fueled political and economic uncertainty in 2010 with street protests against a constitutional amendment to reverse the 15-year practice of holding national elections under a neutral caretaker administration. Bangladesh is one of the world’s poorest nations, and the majority of its people work in agriculture, though service industries now account for over half of GDP. Weak institutions, poverty, and too much government intervention, which leads to corruption, undermine economic development and fuel social and political unrest. Bangladesh receives relatively large inflows of remittances and around $100 million a year in aid from the United States.

Rule of LawView Methodology

Property Rights 20.0 Create a Graph using this measurement

Freedom From Corruption 27.0 Create a Graph using this measurement

The civil court system is based on the British model, and the constitution provides for an independent judiciary, but contract enforcement and dispute settlement are inefficient. Corruption remains a serious problem. The government says it is committed to fighting corruption, but its efforts to ease public procurement rules and proposals to curb the Anti-Corruption Commission’s independence may undermine institutional safeguards.

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 (VAT) that is currently being reformed. The overall tax burden is equal to 9 percent of GDP. Government spending equals 16.2 percent of total domestic output, and public debt has declined to below 50 percent of GDP. A large bureaucracy hinders government effectiveness.

Regulatory EfficiencyView Methodology

Business start-up has become simpler, with required procedures reduced to seven and no minimum capital required. Obtaining necessary permits takes more than 150 days. Although a well-functioning labor market has not fully developed, labor productivity growth has been slightly higher than wage hikes. Inflationary pressure has moderated somewhat, but price-control measures remain in place.

Open MarketsView Methodology

Myriad non-tariff barriers and the government’s reliance on tariffs as a revenue source increase the cost of trade. Although foreign investment is welcome, potential investors face a host of challenges, including regulations that may favor domestic firms. Reform of the financial sector has been ongoing, but 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

Regional Ranking

rank country overall change
1Hong Kong89.3-0.6
4New Zealand81.4-0.7
8South Korea70.30.4
9Malaysia 66.1-0.3
10Thailand 64.1-0.8
13Sri Lanka60.72.4
15Kyrgyz Republic 59.6-0.6
17The Philippines58.21.1
24Pakistan 55.10.4
26Papua New Guinea53.6-0.2
28Bangladesh 52.6-0.6
37Solomon Islands45-1.2
41North Korea1.50.5
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