Un free policy and poor economic status

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http://dailyasianage.com/news/21407/un-free-policy-and-poor-economic-status The 2015 Index of Economic Freedom and Bangladesh

Un-free policy and poor economic status M S Siddiqui

09 June 2016

The preamble of our Constitution pledg-ed that it shall be a fundamental aim of the State to realise through the democratic process to socialist society, free from exploitation, a society in which the rule of law, fundamental human rights and freedom, equality and justice, political, economic and social, will be secured for all citizens.

The Article 8 of the original constitution, which speaks of the four fundamental principles of state policy-nationalism, socialism, democracy and secularism. After the amendment in 1975 the fundamental principles socialism The principle of socialism was given a new explanation, saying "socialism would mean economic and social justice". A few years back, The Supreme Court has repealed the amendment and the Principle of Socialism re-instated as of original constitution.

Socialism promotes public ownership of the means of production and distribution of resources. The constitution of Bangladesh clause 13 stated the Principle of ownership that the people shall own or control the instruments and means of production and distribution, and with this end in view ownership shall assume the following forms- (a) state ownership, that is ownership by the State on behalf of the people through the creation of an efficient and dynamic nationalised public sector embracing the key sectors of the economy; (b) cooperative ownership, that is ownership by co-operatives on behalf of their members within such limits as may be prescribed by law; and private ownership, that is ownership by individuals within such limits as may be prescribed by law.

The first Industrial Investment Policy promoted nationalisation as a means of production since 'Socialism being one of the fundamental precepts of State policy'. The Bangabandhu Govern-ment nationalised all industries that were abandoned by the former Pakistani owners and Bengalee-owned big industries too. About 92 percent of nation's industrial fixed assets came under the nationalisation process. But post- 75 governments have denationalized and sold most of other industries at a through way prices. Government also enacted Privation Law in 2000.

The law and policy has been amended to increase the limit from Tk25 lacs of private owenership to an unlimited level by pre-75 governments. After the change in global political scenario in later 80s and globalization, the economy has taken a shape of "free economy". But the character of free economy does not really exist here.

There are three fundamental principles of economic freedom-empowerment of the individual, nondiscrimination, and open competition. In an economically free society, the power of economic decision-making

2 is widely dispersed, and the allocation of resources for production and consumption is on the basis of open competition so that every individual or firm gets a fair chance to succeed.

It is believe that free economy plays a vital role in developing and sustaining personal and national prosperity.

In contrast, controlled economy has opposite impact on economy. A free society releases the energies and abilities of people to pursue their own objectives. It prevents some people from arbitrarily suppressing others.

The 2015 Index of Economic Freedom assesses economic policy developments in 186 economies in six regions around the world Washington-based think tank Heritage Foundation and the Wall Street Journal. These two organizations conducting the study for last 10 years.

The 10 variables are used to measure the economic freedom and those are property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, financial freedom. Each of the measured aspects of economic freedom plays a vital role in developing and sustaining personal and national prosperity. All are complementary in their impact and there is no option of compromise on any of those economic policy, administrative or rule of law.

Out of studied countries, only five have sustained very high freedom scores of 80 or more, putting them in the ranks of the economically "free." The next 30 countries have been rated as "mostly free" economies recording scores between 70 and 80. With scores of 60 to 70, the next 55 countries placed them in the "moderately free" category. Nearly half of the remaining countries graded in the Index-88 economies-have registered economic freedom scores below 60. Of those, 62 economies are considered "mostly unfree" (scores of 50-60), and 26 are clearly "repressed" (below 50). Hong Kong and Singapore, New Zealand, Australia, New Zealand and Switzerland are the only economies considered "free" with economic freedom scores above 80 on the 0-to-100 Index grading scale. These countries allow their citizens more economic freedom reach higher incomes and better standards of life. People in these countries live longer with better health.

According to the study about 50 percent of all nations and territories graded in the 2015 Index, provide institutional environments in which individuals and private enterprises benefit from at least a moderate degree of economic freedom in the pursuit of greater prosperity and success.

As the Index has shown the nations with higher degrees of economic freedom prosper because they capitalize more fully on the ability of the free-market system and also reinforced dynamic growth through efficient resource allocation, value creation, and innovation. The findings of the 2015 Index once again demonstrate the strongly positive linkages between economic freedom and various dimensions of human development. It is equally notable are the fundamental benefits that stem from the strong positive relationship between economic freedom and levels of per capita income. Countries achieved scores in the Index that reflect even moderate levels of economic freedom ( score 60 or above), revealed that the relationship between economic freedom and per capita GDP is highly significant.

There is a stunningly high correlation between economic freedom and prosperity. Average per capita income in countries ranked "free" is more than double that found in "moderately free" countries and more than ten times that attained in "mostly unfree" and "repressed" economies.

Bangladesh with its score point at 53.2 is trailing behind Sri Lanka (58.3), Bhutan (56.6), Pakistan (54.7), and India (54.6) and got the 130th place among the 186 countries rated as the "mostly unfree". The good news that Bangladesh has moved slightly upward on the score card by 0.2 point, though its ranking remained static compared to that of the last year.

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Economic freedom is the key to achieving the broad-based economic dynamism that ensures lasting inclusive growth and increased prosperity for society as a whole. Economic freedom is indispensable to lasting prosperity, empowering people with more opportunities.

In many respects, economic freedom is merely shorthand for an openness to entrepreneurial activity that increases opportunity for individuals to succeed in their endeavors. The study shows the close correspondence between economic freedom and entrepreneurial opportunity as measured by the Entrepreneurship and Opportunity sub-index of the Legatum Prosperity Index, which measures a country's entrepreneurial environment, its promotion of innovative activity, and the evenness of opportunity.

The Growth and prosperity of a nation flourishes in an economic environment that encourages and rewards entrepreneurship and innovation. Investment capital and entrepreneurial talent flow to nations where these conditions prevail. The free nations are able to be better stewards of the environment, and they push forward the frontiers of human achievement in science and technology through greater innovation through growth of entrepreneurship. Free economy is the natural birthplace of entrepreneurs. Bangladesh economy may be given more freedom for growth of entrepreneurship and economic prosperity by road shown by other economies. It really needs (a) Rule of law (property rights, freedom from corruption); (b) Government size (fiscal freedom, government spending); (c) Regulatory efficiency (business freedom, labor freedom, monetary freedom); and (d) Market openness (trade freedom, investment freedom, financial freedom).

The writer is legal economist