United Nations Development Programme (UNDP) identified in 2002 three fundamental areas of human development in which the Arab world lags behind the rest of the world. One of those specified areas was the lack of freedom and democracy. To investigate the presence of the democratic deficit, the study introduces a composite democracy index that measures and compares countries’ performances in the democratic domains. This paper aims to define and describe the democratic deficit in the context of the Islamic world, verify its existence in the Arab world, and determine its possible presence in other Muslim countries in various world regions. The study results showed that although the deficit was formulated almost twenty years ago, it is still relevant. It has been observed that Muslim countries performed, on average, worse on the index score than non-Muslim countries, which means that the Islamic countries face the democratic deficit. Moreover, the results showed that the performance of the Arab world in the democratic index is even worse than that of the other Muslim countries. The analysis additionally confirmed that the economic factor is important in verification of the deficit and its depth. On the level of individual countries, poor Muslim states often achieved the worst results, usually from the group of the least developed countries, such as Yemen, Somalia, Sudan, or Eritrea.