Economy of Liberia

Economy of Liberia

Currency	Liberian dollar (LRD) United States dollar (USD)
Trade organizations	AU, AfCFTA (signed), African Development Bank, ECOWAS, MRU, WAMZ, WTO, Group of 77
Country group	Least Developed[1] Low-income economy[2]
Statistics
Population	5,073,296 (2020 est.)[3]
GDP	$3.222 billion (nominal, 2019 est.)[4] $6.471 billion (PPP, 2019 est.)[4]
GDP rank	158th (nominal, 2019) 159th (PPP, 2019)
GDP growth	2.5% (2017) 1.2% (2018) −1.4% (2019e) 1.4% (2020f)[5]
GDP per capita	$704 (nominal, 2019 est.)[4] $1,414 (PPP, 2019 est.)[4]
GDP per capita rank	174th (nominal, 2019) 178th (PPP, 2019)
GDP by sector	agriculture: 34% industry 13.8% services 52.2% (2017 est.)[3]
Inflation (CPI)	20.5% (2020 est.)[4]
Population below poverty line	54.1% (2014 est.)[3] 40.9% on less than $1.90/day (2016)[6]
Gini coefficient	35.3 medium (2016)[7]
Human Development Index	0.465 low (2018)[8] (176th) 0.314 low IHDI (2018)[9]
Labor force	1,639,258 (2019)[10] 74.6% employment rate (2016)[11]
Labor force by occupation	agriculture: 70% industry: 8% services: 22% (2000 est.)[3]
Unemployment	2.8% (2014 est.)[12]
Main industries	mining (iron ore and gold), rubber processing, palm oil processing, diamonds
External
Exports	$260.6 million (2017 est.)[3]
Export goods	rubber, timber, iron, diamonds, cocoa, coffee[3]
Main export partners	Germany 36.2%   Switzerland 14.2%  United Arab Emirates 8.8%  United States 6.8%  Indonesia 4.7% (2017)[3]
Imports	$1.166 billion (2017 est.)[3]
Import goods	fuels, chemicals, machinery, transportation equipment, manufactured goods; foodstuffs[3]
Main import partners	Singapore 29.8%  China 24.4%  South Korea 17.5%  Japan 9.4% (2017)[3]
Current account	−$627 million (2017 est.)[3]
Gross external debt	$1.036 billion (31 December 2017 est.)[3]
Public finances
Government debt	34.4% of GDP (2017 est.)[3]
Budget balance	−4.3% (of GDP) (2017 est.)[3]
Revenues	553.6 million (2017 est.)[3]
Expenses	693.8 million (2017 est.)[3]
Economic aid	recipient: International multi-billion dollar debt relief and development aid
Foreign reserves	$459.8 million (31 December 2017 est.)[3]
All values, unless otherwise stated, are in US dollars.

The economy of Liberia is extremely underdeveloped, with only $3.222 billion by gross domestic product as of 2019, largely due to the First (1989–1996) and Second Liberian Civil War (1999–2003). Liberia itself is one of the poorest and least developed countries in the world, according to the United Nations.

Until 1979, Liberia's economy was among the more developed and fastest-growing in Sub-Saharan Africa, but after the 1980 coup d'état, it declined, and the civil war destroyed much of Liberia's economy and infrastructure, especially the infrastructure in and around the nation's capital, Monrovia. The war also caused a brain drain and the loss of capital, as the civil war involved overthrowing the Americo-Liberian minority that ruled the country. Some have returned since 1997, but many have not.

Liberia is richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, but poor in human capital, infrastructure, and stability. Liberia has a fairly typical profile for Sub-Saharan African economies. The majority of the population is reliant on subsistence agriculture, while exports are dominated by raw commodities such as rubber and iron ore. Local manufacturing, such as it exists, is mainly foreign-owned.

The democratically elected government, installed in August 1997, inherited massive international debts and currently relies on revenues from its maritime registry to provide the bulk of its foreign exchange earnings. The restoration of the infrastructure and the raising of incomes in this ravaged economy depend on the implementation of sound macro- and microeconomic policies of the new government, including the encouragement of foreign investment.^{[according to whom?]}

Economic history

Much of independent Liberia's economic history is subject to limited archival documentation, making it hard for economic historians to make comprehensive assessments about the nature of Liberia's economy over time.^[13] The Liberian government only began producing GDP per capita data in 1964.^[13]

A 2022 study by LSE economic historian Leigh A. Gardner assessed that Liberian GDP per capita was $430 in 1845, which was just above subsistence and approximately half of Japan's GDP per capita at the time.^[13] It rose to approximately $500 by the time of independence, but the economy subsequently stagnated until the 1930s when a period of rapid economic growth began.^[13] Whereas Liberia had been poorer than Ghana during the 19th and early 20th centuries, it caught up with Ghana in 1950 and subsequently diverged considerably, becoming almost twice as wealthy as Ghana by 1970.^[13] Throughout the 1970s, the Liberian economy stagnated.^[13]

In 1926, the Liberian government gave the Firestone Tire company the right to lease up to 1 million acres of land for 99 years at a cost of 6 cents per acre.^[14] Firestone developed an inordinate sway over the Liberian government, effectively acquiring control over its finances in the subsequent period.^[14] The company was an important source of foreign investment into Liberia during this period.^[14] Firestone then set about establishing rubber tree plantations of the non-native South American rubber tree, Hevea brasiliensis in the country. By the 1950s, the company was Liberia's largest private employer and also its largest exporter.^[15] Vincent Browne wrote in 1955 that rubber accounted for more than $45,000,000 of Liberia's approximately $55,000,000 worth of exports.^[14] Liberia became one of the largest rubber exporters in the world in the post-World War II period.^[14] Today, Firestone's rubber plantation in Liberia is the world's largest contiguous rubber plantation, operated by the Firestone (now Bridgestone) subsidiary, the Firestone Natural Rubber Company.

In the 1940s, Liberia become one of the largest recipients of American aid. US aid to Liberia began with the Lend-Lease program of 1942.^[16] The aid per capita received by Liberia was comparable to that obtained by countries such as Korea and Marshall Aid recipients like the United Kingdom.^[16] Economic historian George Dalton estimated in 1965 that Liberia received more aid per capita from the United States than any other African country.^[17]

In the post-WWII period, Liberia tried to become a destination for offshore services, as the country loosened laws related to ship registration, corporation, and taxes.^[18] The Liberian shipping registry was highly successful as Liberia had by the 1960s become the largest ship registry in the world in terms of tonnage.^[18]

The Liberian economy had relied heavily on the mining of iron ore prior to the civil war. Liberia was a major exporter of iron ore on the world market. By the 1970s, iron mining accounted for more than half of Liberia's export earnings. Since the coup d'état of 1980, the country's economic growth rate has slowed down because of a decline in the demand for iron ore on the world market and political upheavals in Liberia.

Upon the end of the war in 2003, GDP growth began to accelerate again, reaching a peak of 9.4% in 2007.^[19]In 2009, during the Great Recession GDP growth slowed to 4.6%,^[19] though a strengthening agricultural sector led by rubber and timber exports increased growth to 5.1% in 2010 and an expected 7.3% in 2011, making the economy one of the 20 fastest growing in the world.^[20][21]

In March 2010, Bob Johnson, founder of BET, funded the first hotel constructed in Liberia in 20 years. The 13-acre (53,000 m²) luxury resort was built in the Paynesville section of Monrovia.^[22]

Liberia's external debt was estimated in 2006 at approximately $4.5 billion, 800% of GDP.^[23] As a result of bilateral, multilateral and commercial debt relief from 2007 to 2010, the country's external debt fell to $222.9 million by 2011.^[24]

Economic sectors

Boy grinding sugar cane 1968

Liberia's business sector is largely controlled by foreigners mainly of Levantine (primarily Lebanese) and Indian descent. There also are limited numbers of Chinese people engaged in agriculture. The largest timber concession, Oriental Timber Corporation (OTC), is Indonesian owned. There also are significant numbers of West Africais engaged in cross-border trade. Legal monopolies are possible; for example, Cemenco holds a monopoly on cement production.

Forestry

Timber and rubber are Liberia's main export items since the end of the war. Liberia earns more than $100 million and more than $70 million annually from timber and rubber exports, respectively.

Mining and resources

Main article: Mining industry of Liberia

Alluvial diamond and gold mining activities also account for some economic activity. In recent years (2005 - 2012), foreign investment from ArcelorMittal Steel, BHP Biliton, and China Union is aiding the revitalization of the iron-ore mining sector.

Liberia has begun exploration for offshore oil; unproven oil reserves may be in excess of one billion barrels.^[25] The government divided its offshore waters into 17 blocks and began auctioning off exploration licenses for the blocks in 2004, with further auctions in 2007 and 2009.^[26][27][28] An additional 13 ultra-deep offshore blocks were demarcated in 2011 and planned for auction.^[29] Among the companies to have won licenses are Repsol YPF, Chevron Corporation, and Woodside Petroleum.^[30]

Shipping flag of convenience

Liberia maintains an open maritime registry, meaning that owners of ships can register their vessels as Liberian with relatively few restrictions. This has meant that Liberian ship registration is usually understood as the employment of a flag of convenience. Liberia has the second-largest maritime registry in the world behind Panama, with 4,300 vessels registered under its flag accounting for 12% of ships worldwide.^[31][32] This includes 35% of the world's tanker fleet. Liberia earned more than $18 million from its maritime program in 2000.

Foreign aid

Liberia has relied heavily on vast amounts of foreign assistance, particularly from the United States, Sweden, Britain, France, Italy, Germany, the People's Republic of China, and Romania. But because of the Liberian Government's perceived disregard for human rights, foreign assistance to Liberia has declined drastically.

The Republic of China (Taiwan) and Libya are currently the largest donors of direct financial aid to the Liberian Government. Significant amounts of aid continue to come in from Western countries through international aid agencies and non-governmental organizations, avoiding direct aid to the government.

Communications

Further information: Communications in Liberia

Communications in Liberia is the press, radio, television, fixed and mobile telephones, and the Internet. There are six major newspapers in Liberia, and 45% of the population has a mobile phone service. Also, the radio stations in Liberia are abundant to the extent that there are over 70 radio stations in the entire country (Liberia). As for Montserrado County, there exist about 30 radio stations.

Even as it struggles with economic and political constraints, Liberia's media environment is expanding. The number of registered newspapers and radio stations (many of them community stations) is on the rise despite limited market potential. And politically critical content and investigative pieces do get published or broadcast.^[33]

Energy

Further information: Energy in Liberia

Formal electricity services are solely provided by the state-owned Liberia Electricity Corporation, which operates a small grid almost exclusively in the Greater Monrovia District.^[34] The vast majority of electric energy services is provided by small privately owned generators. At $0.54 per kWh, the electricity tariff in Liberia is among the highest in the world. Total installed capacity in 2013 was 20 MW, a sharp decline from a peak of 191 MW in 1989.^[34]

International economic networks

Liberia is a member of the Economic Community of West African States (ECOWAS). With Guinea and Sierra Leone, it formed the Mano River Union (MRU) for development and the promotion of regional economic integration. The MRU became all but defunct because of the Liberian civil war which spilled over into neighboring Sierra Leone and Guinea.

See also

• Central Bank of Liberia
• Transport in Liberia
• Tourism in Liberia
• Firestone Natural Rubber Company
• United Nations Economic Commission for Africa

References

1. "World Economic Outlook Database, April 2019". IMF.org. International Monetary Fund. Retrieved 29 September 2019.
2. "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
3. "AFRICA :: LIBERIA". data.worldbank.org. World Bank. Retrieved 6 March 2020.
4. "World Economic Outlook Database, October 2019". IMF.org. International Monetary Fund. Retrieved 22 January 2020.
5. "Global Economic Prospects, January 2020 : Slow Growth, Policy Challenges" (PDF). openknowledge.worldbank.org. World Bank. p. 147. Retrieved 22 January 2020.
6. "Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population) - Liberia". data.worldbank.org. World Bank. Retrieved 6 March 2020.
7. "GINI index (World Bank estimate) - Liberia". data.worldbank.org. World Bank. Retrieved 6 March 2020.
8. "Human Development Index (HDI)". hdr.undp.org. HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 11 December 2019.
9. "Inequality-adjusted Human Development Index (IHDI)". hdr.undp.org. HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 11 December 2019.
10. "Labor force, total - Liberia". data.worldbank.org. World Bank. Retrieved 6 March 2020.
11. "Employment to population ratio, 15+, total (%) (national estimate) - Liberia". data.worldbank.org. World Bank. Retrieved 6 March 2020.
12. "Report on the Liberia Labour Force Survey 2010" (PDF). Liberia Institute of Statistics and Geo-Information Services (LISGIS). February 2011.
13. Gardner, Leigh A., ed. (2022), "Reconstructing the Fragments: Liberia's Economic History, 1847–1980", Sovereignty without Power: Liberia in the Age of Empires, 1822–1980, Cambridge University Press, pp. 1–30, doi:10.1017/9781009181082.002, ISBN 978-1-009-18110-5
14. Browne, Vincent J. (1955). "Economic Development in Liberia". The Journal of Negro Education. 24 (2): 113–119. doi:10.2307/2293474. ISSN 0022-2984. JSTOR 2293474.
15. "Firestone and the Warlord, Chapter 2", T. Christian Miller and Jonathan Jones, November 18, 2014, ProPublica and PBS Frontline
16. Gardner, Leigh A., ed. (2022), "An African Marshall Plan", Sovereignty without Power: Liberia in the Age of Empires, 1822–1980, Cambridge University Press, pp. 191–216, doi:10.1017/9781009181082.009, ISBN 978-1-009-18110-5
17. Dalton, George (1965). "History, Politics, and Economic Development in Liberia*". The Journal of Economic History. 25 (4): 569–591. doi:10.1017/S0022050700058423. ISSN 1471-6372. S2CID 154558909.
18. Gardner, Leigh A., ed. (2022), "Selling the Flag", Sovereignty without Power: Liberia in the Age of Empires, 1822–1980, Cambridge University Press, pp. 246–270, doi:10.1017/9781009181082.011, ISBN 978-1-009-18110-5
19. "Report for Selected Countries and Subjects: Liberia". International Monetary Fund. June 20, 2011.
20. "IMF Country Report No. 10/37" (PDF). International Monetary Fund. 2010.
21. "Liberian President: Government and People are Partners in Progress". Africa Governance Initiative. January 27, 2011. Archived from the original on December 20, 2016.
22. "Fact Sheet - RLJ Kendeja Resort & Villas". Archived from the original on 2010-01-28.
23. "The Challenges of Post-War Reconstruction—the Liberian Experience". Government of Liberia. allAfrica.com. June 13, 2011.
24. "Second Quarter 2010/2011 Public Debt Management Report" (PDF). Debt Management Unit. Ministry of Finance. March 25, 2011. Archived from the original (PDF) on September 10, 2013.
25. "Liberia may have over 1 bln barrels in oil resources". Reuters Africa. November 3, 2009. Archived from the original on January 20, 2012.
26. "NOCAL 2004 Liberia Offshore Bid Round Announcement". Business Wire. February 2, 2004.
27. Pearson, Natalie Obiko (December 10, 2007). "Liberia Opens Bidding for 10 Offshore Oil Blocks". RigZone.
28. "Third Liberian Offshore Petroleum Licensing Round 2009". Deloitte Petroleum Services. Deloitte. August 27, 2009. Archived from the original on November 4, 2013.
29. Toweh, Alphonso (July 21, 2011). "Liberia marks out new oil blocks, auction seen soon". Reuters. Archived from the original on March 22, 2012.
30. "Chevron to Acquire Deepwater Interest Offshore Liberia" (Press release). Chevron Corporation. September 8, 2010. Archived from the original on September 27, 2020. Retrieved August 9, 2019.
31. Schoenurl, John W. (August 11, 2003). "Liberian shipping draws scrutiny". NBC News. Archived from the original on October 20, 2020.
32. "About the Liberian Registry". Liberian Registry. Archived from the original on 2014-11-10.
33. "Media Environment and Regulation in Liberia" Archived 2016-03-04 at the Wayback Machine, AudienceScapes. Retrieved 8 February 2014.
34. "Options for the Development of Liberia's Energy Sector" (PDF). International Bank for Reconstruction and Development. World Bank Group. 2011.

External links

• 68% of Liberians live in poverty census reveals
• Mineral resources of Liberia
• Liberia latest trade data on ITC Trade Map
• Liberia profile - World Bank