Poor infrastructure, endemic corruption, insufficient power supply, and slow implementation of economic reforms were found to be impediments to Bangladesh's economic growth, said a new global report.
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, said the Economic Freedom Index-2019 released by the US-based Heritage Foundation.
"The fragile rule of law continues to undermine economic development. Corruption and weak enforcement of property rights force workers and small businesses into the informal economy," said the report released on January 25.
The index ranked 186 countries and categorised them under five groups -- free, mostly free, moderately free, mostly unfree and repressed.
Bangladesh falls in the "mostly unfree" category.
The country moved up seven notches to 121st from 128th position in the index with an economic freedom score of 55.6 points.
Last year, Bangladesh's position was 128th as it scored 55.1 points.
Its overall score of Bangladesh had increased by 0.5 point, with improvements in the scores for property rights and "government integrity countering declines in investment freedom and fiscal health.
Of the 186 countries included in this 25th edition of the index, 180 are fully scored and ranked. Because of the lack of sufficient reliable data, six countries -- Iraq, Libya, Liechtenstein, Somalia, Syria, and Yemen -- are evaluated and partially-graded but not ranked.
Ranked countries were given an overall score ranging from 0 to 100 on each of the 12 components of economic freedom, and these scores were then averaged, using equal weights, to compute a country's final economic freedom score.
"The average level of economic freedom in the world declined this year by 0.3 point, from 61.1 to 60.8. That's still the third-highest level ever, but any decline is cause for concern," the report said.
The index used four broad categories for measurement: rule of law, government size, regulatory efficiency and open markets.
There are sub sectors in four categories including 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 are also taken into account while measuring the economic freedom of a country.
The report said robust economic growth of approximately six percent annually for two decades had been driven by a rapid increase in private consumption and fixed investment in Bangladesh.
However, it added, “The judiciary is slow and lacks independence… Endemic corruption and criminality, weak rule of law, limited bureaucratic transparency, and political polarization have undermined government accountability.”
The report also observed that high-profile corruption cases were common, including two recent cases involved a former chief justice and a former prime minister.
"A well-functioning labour market has not been fully developed, but labour productivity growth has been slightly higher than wage hikes,” said the report.
The index showed that Bangladesh also ranked 27th among 43 countries in the Asia-Pacific region, and its overall score was below the regional and world averages.
The world average freedom score is 60.8 points, while the Asia Pacific regional average stands at 60.6 points.
The report said in the South Asian region, Nepal ranked 136th, Sri Lanka ranked 115th, Bhutan ranked 74th, India 129th, Pakistan 131st, and the Maldives achieved the status of 141st economy.
Hong Kong, Singapore and New Zealand each logged increases in their index scores, finishing first, second, and third in the rankings, respectively scoring 90.2, 89.4, and 84.4 points.