Bangladesh Economics

Course Code: 524

Jeta Majumder
Assistant Professor
Department of Marketing
University of Dhaka
Economic Freedom
• Economic freedom, or economic liberty, is the ability of people of a society
to take economic actions.
• For well over a hundred years, the economic world has been engaged in a
great intellectual debate.
• On one side of this debate have been those philosophers and economists
who advocate an economic system based on private property and free
markets—or what one might call economic freedom.
• The key ingredients of economic freedom are personal choice, voluntary
exchange, freedom to compete in markets, and protection of person and
property.
• Institutions and policies are consistent with economic freedom when they
allow voluntary exchange and protect individuals and their property.
Economic Freedom
• Economic freedom, however, is not a single system.
• In many respects, it is the absence of a single dominating system.
Over the past 25 years, the Index has demonstrated that economic
freedom is not a dogmatic ideology.
• It represents instead a philosophy that rejects dogma and embraces
diverse and even competing strategies for economic advancement.
• Each year, the Index provides compelling evidence that it is not the
policies we fail to implement that hold back economic growth.
• Rather, it is the dreadful policies that our governments all too often
put in place.
Economic Freedom
• At its heart, economic freedom is about individual autonomy,
concerned chiefly with the freedom of choice enjoyed by individuals
in acquiring and using economic goods and resources.
• The underlying assumption of those who favor economic freedom is
that individuals know their needs and desires best and that a self-
directed life, guided by one’s own philosophies and priorities rather
than those of a government or technocratic elite, is the foundation of
a fulfilling existence.
• Independence and self-respect flow from the ability and
responsibility to take care of oneself and one’s family and are
invaluable contributors to human dignity and equality
Read! Comprehend!
• https://www.econlib.org/library/Enc/EconomicFreedom.html
What is an Index of Economic Freedom?
• An index of economic freedom measures jurisdictions against each
other in terms of trade freedom, tax burden, judicial effectiveness,
and so on.
• These factors may be weighted according to their influence on
economic freedom and compiled into a single score that allows for a
ranking.
• The ranking can be done on a country basis or can look at wider
regions or smaller sub-national units like states.
KEY TAKEAWAYS
• An index of economic freedom scores and ranks countries according
to criteria that the creators of the index judge as being relevant. Not
all economists will agree on the criteria, of course.
• Indexes of economic freedom score free-market economies at the
high end of the spectrum.
• There is a strong correlation between the index of economic freedom
ranking of a country and the income their citizens enjoy.
• Investors can use the index of economic freedom as a quick way to
monitor the changes in economies they have or want exposure to.
The most widely referenced index of economic freedom is produced by the Heritage
Foundation, a conservative American think tank. The Fraser Institute, a Canadian
think tank, also publishes a well-known index of economic freedom.
Understanding the Index of Economic Freedom
• Property rights • Business freedom
• Judicial effectiveness • Labor freedom
• Government integrity • Monetary freedom
• Tax burden • Trade freedom
• Government spending • Investment freedom
• Fiscal health • Financial freedom
• A country's scores in each area are then compiled into a single score,
according to which countries are ranked from most (highest score) to
least free.
• It should be noted that some of these categories are ideologically
loaded: what appeals to a laissez-faire economist as a high degree of
labor freedom might strike a liberal economist as a lack of worker
protection, for example.