Freedom and Prosperity in Bangladesh

Nina Dannaoui, Annie Lee, and Joseph Lemoine

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EXECUTIVE SUMMARY

Bangladesh, a nation born from a fight for democracy, has set its sights firmly on the future. Its ambitious Vision 2041 agenda outlines a strategic course toward a developed and prosperous Bangladesh by the year 2041. This plan, which emphasizes economic growth alongside social progress, underscores the nation’s commitment to empowering its citizens and solidifying its democratic foundation.

Bangladesh’s pursuit of a prosperous future is undeniably intertwined with the level of its freedoms. However, recent events paint a complex picture. The January parliamentary elections solidified a shift toward a “dominant-party” system. The Awami League capitalized on an opposition boycott to extend its fifteen-year rule, with Prime Minister Sheikh Hasina poised to become the world’s longest-serving female head of government. While this signifies stability, dominant-party systems often face challenges that can undermine good governance. Ensuring healthy competition across politics, government, and the economy is crucial to mitigate these risks.

It is within this context that we must examine the current state of freedom and prosperity in Bangladesh: a nation striving for a bright future, yet facing potential hurdles associated with its evolving political landscape.

The Atlantic Council’s Freedom and Prosperity Indexes rank 164 countries around the world according to their levels of freedom and prosperity. These two separate indexes were created to move past heated arguments about freedom and democracy by focusing on facts. Which type of government system yields the best results for its people?

Not only do free countries tend to be wealthier and healthier places to live, but data indicates that freedom tends to lead to prosperity. Countries that granted their citizens more freedoms between 1995 and 2022 also saw significant increases in prosperity. Conversely, nations like Venezuela, Nicaragua, Belarus, Turkey, Russia, and Yemen all experienced significant drops in freedom followed by economic decline. This two-way street highlights that while freedom fosters prosperity, prosperity itself can be fragile without the protections offered by a free society.

While the Freedom and Prosperity Indexes show a link between freedom and prosperity, there is often a delay. This lag time depends on a variety of factors unique to each country, as well as the overall health of the global economy. Foreign investment can be a powerful tool to bridge this gap and accelerate prosperity

The data show that, over the past thirty years, free countries received significantly more foreign direct investment (FDI) per person than those with less freedom. This suggests that political and economic freedoms, along with strong legal systems, create a more welcoming environment for foreign investors. The analysis even shows a clear link between specific freedoms and the amount of FDI a country receives as a percentage of its gross domestic product (GDP). Overall, the Freedom Index suggests that a strong commitment to freedom is key to attracting foreign investment.

Today, Bangladesh finds itself positioned 141st out of 164 countries on the Freedom Index, placing it within the “mostly unfree” category. This index comprehensively assesses both economic and political freedoms, along with adherence to the rule of law. The Political Subindex reflects a country’s institutional framework for the selection of those holding executive political power, and the limits and controls imposed on those in power. The Economic Subindex measures whether the bulk of economic activity in a country is guided by the principles of free and competitive markets. The Legal Subindex measures the degree to which a country abides by the rule of law. Countries demonstrating strength across all three subindexes tend to experience higher levels of prosperity.

On the Prosperity Index, Bangladesh stands at 99th out of 164, which categorizes it as “mostly unprosperous.” The Prosperity Index takes a similarly broad view, going beyond the measurement of pure material well-being to also evaluate several other social factors necessary for a prosperous society.

The Prosperity Index has six indicators: income, health, education, environment, minority rights, and inequality.

This report delves into Bangladesh’s performance and trends observed across the nineteen components measured by “The Freedom and Prosperity Indexes.” Despite an overall decline in freedom, Bangladesh has demonstrated resilience in terms of prosperity. However, these declines in freedom have certainly impeded its progress. Drawing from our data, we can pinpoint opportunities for the government of Bangladesh to enact critical reforms aimed at supporting long-term prosperity.

THE FREEDOM INDEX

In free societies, various institutions work together to uphold freedom. We think of freedom in a comprehensive way, combining political freedom (practicing democracy and individual rights), legal freedom (following the rule of law), and economic freedom (having a market economy). That is why the Freedom Index combines three subindexes: the Legal, Economic, and Political Subindexes. Each of these subindexes covers several components. This section will explain how we measure each type of freedom and why we chose these specific components. We base our choices on well-established definitions from academic sources in law, political science, and economics.

The Legal Subindex measures the degree to which a country’s citizens and government officials follow and apply existing laws and regulations fairly. This measurement is closely associated with concepts of certainty, stability, and predictability. When a country, especially its government, generally upholds the rule of law, individuals can make informed decisions about various aspects of their lives, such as economic, family, or political matters, based on rational expectations of the future.

We put our chosen definition of legal freedom into practice through five key components.

• Clarity of the law: This checks if the legal system meets basic requirements. It looks at whether laws are general, clear, public, consistent, and enforced predictably
• Judicial independence and effectiveness: This assesses how strong and fair a country’s judicial system is. It ensures that laws are upheld and violations are properly addressed
• Bureaucracy and corruption: This evaluates how well government officials follow and abide by the law.
• Security: This assesses whether people generally follow the country’s laws and regulations, based on perception of potential political unrest or violence, such as terrorism.
• Informality: This tracks informal economic activity, measured as the percentage of GDP contributed by the informal economy.

The Political Subindex looks at how a country’s system selects its leaders and keeps their power in check. Essentially, it aligns with the principles of democracy and individual rights. The political freedom measurement has four key components.

• Elections: This checks if political leaders are chosen by the people in fair and open elections in which everyone has the chance to vote.
• Political rights: This focuses on individual rights that are closely tied to the democratic political process, like freedom of speech and association.
• Civil liberties: This assesses whether people have basic rights, like the right to a fair trial, freedom from torture, and the right to move freely.
• Legislative constraints on the executive: This tracks how much oversight and control elected lawmakers have over the government’s use of power