Where Bangladesh stands on prosperity: Perspectives from the Legatum Prosperity Index

Economic prosperity is a paramount goal, transcending mere wealth and striving to afford citizens opportunities and freedoms. It hinges on a robust social contract, enabling individuals to leverage their ideas and skills for sustainable poverty alleviation, fostering contributions to societies that prioritise well-being.

The Legatum Prosperity Index's primary aim is to gauge the present state, and serve as a transformative instrument to set growth and development targets for nations. The latest report not only highlights growth, but also quantifiable enhancements in national livelihoods. Acting as a barometer of progress, the index steers the course for future initiatives, guiding policies and business strategies towards prosperous societies.

Comprising three main domains—inclusive societies, open economics, and empowered people—the index delineates 12 pillars. Inclusive societies encompass safety and security, personal freedom, governance, and social capital. Open economics evaluates investment environments, enterprise conditions, infrastructure, market access, and economic quality. The empowered people scrutinise living conditions, health, education, and the natural environment.

According to the Legatum Prosperity Index (LPI), Denmark has maintained its reign as the top-ranked country for an impressive six consecutive years, holding onto its prestigious position since 2018. Following closely behind are Sweden, Norway, Finland, and Switzerland, forming a steadfast quintet that has consistently dominated the top five spots over a span of 16 years, from 2007 to 2023, showcasing unwavering performance throughout.

Among the five nations, South Asian countries Nepal and Bangladesh have demonstrated remarkable strides in prosperity. Nepal, starting at a rank of 136 in 2007, has advanced by 26 ranks in 2023, a remarkable leap forward, while Bangladesh has surged from 135 to 124 during the same period, marking an impressive advancement of 11 ranks out of 167 countries.

India and Pakistan have also shown modest improvements, with India inching up by three ranks from 106 to 103 and Pakistan making a more notable leap from 145 to 136, albeit still residing in the lower echelons of the index.

Conversely, Sri Lanka embarked on its prosperity journey with an initial rank of 89 out of 167 countries, witnessing a substantial surge from 2015 to 2018, only to experience a gradual decline thereafter. 

By 2023, Sri Lanka had slipped to the 91st position, losing two ranks over 16 years. It's worth noting that both India and Sri Lanka find themselves ranked above the midpoint, standing among more than 100 countries out of the 167 assessed by the index.

Bangladesh has achieved a remarkable feat in improving its economic quality over the span of 16 years, from 2007 to 2023. Among the 12 pillars analysed in the Legatum Prosperity Index (LPI), seven have shown consistent improvement, outpacing the remaining five. 

These areas of enhancement encompass education, health, living conditions, economic quality, infrastructure, market access, enterprise conditions, and the investment environment. Such progress underscores Bangladesh's endeavour towards fostering open market economics and elevating livelihoods.

Delving deeper into the data, Bangladesh's performance across the 12 pillars of the LPI reveals a mixed picture. On the positive side, the country has demonstrated consistent enhancements in key economic indicators:

Economic Quality: Bangladesh's score in this pillar has steadily improved, reflecting advancements in areas such as GDP per capita, productivity, and financial sector development. According to World Bank data, Bangladesh's GDP per capita (constant 2015 US$) grew from $847.3 in 2007 to $1,784.7 in 2022, showcasing robust economic expansion.

Infrastructure: Investments in transport, utilities, and communication networks have contributed to Bangladesh's infrastructure development. Although there has been improvement, peer economies are doing better than Bangladesh. Thus, it has consistently slipped in position in the World Economic Forum's Global Competitiveness Index, where Bangladesh's infrastructure quality was ranked 105th out of 141 countries in 2019, down from 99th out of 117 countries in 2007.

Market Access and Enterprise Conditions: Improvements in market access, trade policies, and the business environment have enabled Bangladeshi enterprises to thrive. The World Bank's Ease of Doing Business index placed Bangladesh at 168th out of 190 countries in 2020, up from 88th in 2007, indicating progress in creating a more conducive environment for entrepreneurship, though its peers are outperforming it.

However, the LPI data also reveals areas where Bangladesh faces challenges:

Governance: The country's performance in the governance pillar, encompassing factors such as the rule of law, government integrity, and political stability, has seen a marginal decline. Corruption and weak institutional frameworks remain impediments to sustainable prosperity.

Natural Environment: Bangladesh's score in the natural environment pillar has deteriorated, reflecting growing concerns over environmental degradation, air pollution, and climate change vulnerabilities. This poses risks to the country's long-term development.

Social Capital: The erosion of social cohesion and community engagement, as captured by the social capital pillar, suggests a need for strengthening social institutions and fostering community-level resilience.

In summary, while Bangladesh has made commendable advancements in economic empowerment and societal development, there remains ample opportunity to channel resources, time, and effort toward bolstering the natural environment, social capital, governance, personal freedom, safety, and security.

Therefore, to improve its prosperity, Bangladesh needs to focus on developing strong market institutions, enhancing governance, and creating better economic opportunities for its citizens. 

Reforms are needed in areas like increasing investment, strengthening property rights, reducing corruption, and expanding access to quality education. Improving performance across these sub-pillars can help lift Bangladesh in future Legatum Prosperity Index reports.

Ashfaque Reza is a Research Associate at Brac Business School, Brac University. Email: ashfaque.reza@bracu.ac.bd. Dr Mohammad Enamul Hoque is an Assistant Professor at Brac Business School, Brac University. Email: enamul.hoque@bracu.ac.bd.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.