Economy of Liberia
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The economy of Liberia is extremely underdeveloped, with only $3.222 billion by
gross domestic product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is oft ...
as of 2019, largely due to the
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(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 The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and security, develop friendly relations among nations, achieve international cooperation, and be a centre for harmoniz ...
. 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 Monrovia () is the capital city of the West African country of Liberia. Founded in 1822, it is located on Cape Mesurado on the Atlantic coast and as of the 2008 census had 1,010,970 residents, home to 29% of Liberia’s total population. As th ...
. The war also caused a brain drain and the loss of capital, as the civil war involved overthrowing the
Americo-Liberian Americo-Liberian people or Congo people or Congau people in Liberian English,Cooper, Helene, ''The House at Sugar Beach: In Search of a Lost African Childhood'' (United States: Simon and Schuster, 2008), p. 6 are a Liberian ethnic group of Afric ...
minority that ruled the country. Some have returned since 1997, but many have not. Liberia is richly endowed with
water Water (chemical formula ) is an Inorganic compound, inorganic, transparent, tasteless, odorless, and Color of water, nearly colorless chemical substance, which is the main constituent of Earth's hydrosphere and the fluids of all known living ...
,
mineral In geology and mineralogy, a mineral or mineral species is, broadly speaking, a solid chemical compound with a fairly well-defined chemical composition and a specific crystal structure that occurs naturally in pure form.John P. Rafferty, ed. (2 ...
resources,
forest A forest is an area of land dominated by trees. Hundreds of definitions of forest are used throughout the world, incorporating factors such as tree density, tree height, land use, legal standing, and ecological function. The United Nations' ...
s, 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.


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. The Liberian government only began producing GDP per capita data in 1964. A 2022 study by
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economic historian Leigh A. Gardner assessed that Liberian GDP per capita was $430 in 1945, which was just above subsistence and approximately half of Japan's GDP per capita at the time. 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. 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. Throughout the 1970s, the Liberian economy stagnated. In 1926, the Liberian government gave the
Firestone Tire Firestone Tire and Rubber Company is a tire company founded by Harvey Firestone (1868–1938) in 1900 initially to supply solid rubber side-wire tires for fire apparatus, and later, pneumatic tires for wagons, buggies, and other forms of wheele ...
company the right to lease up to 1 million acres of land for 99 years at a cost of 6 cents per acre. Firestone developed an inordinate sway over the Liberian government, effectively acquiring control over its finances in the subsequent period. The company was an important source of foreign investment into Liberia during this period. 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. Vincent Browne wrote in 1955 that rubber accounted for more than $45,000,000 of Liberia's approximately $55,000,000 worth of exports. Liberia became one of the largest rubber exporters in the world in the post-World War II period. 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 Firestone Natural Rubber Company, LLC is a subsidiary of the Bridgestone Americas, Inc. Headquartered in Nashville, TN, the company operates the largest contiguous rubber plantation in the world in Harbel, Liberia, which first opened in 1926. H ...
. 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. 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. Economic historian George Dalton estimated in 1965 that Liberia received more aid per capita from the United States than any other African country. 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. 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. 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. The
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slowed GDP growth to 4.6% in 2009, 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. In March 2010, Bob Johnson, founder of BET, funded the first hotel constructed in Liberia in 20 years. The luxury resort was built in the Paynesville section of Monrovia. Liberia's
external debt A country's gross external debt (or foreign debt) is the liabilities that are owed to nonresidents by residents. The debtors can be governments, corporations or citizens. External debt may be denominated in domestic or foreign currency. It inclu ...
was estimated in 2006 at approximately $4.5 billion, 800% of GDP. 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.


Economic sectors

Liberia's business sector is largely controlled by foreigners mainly of Levantine (primarily Lebanese) and Indian descent. There also are limited numbers of
Chinese Chinese can refer to: * Something related to China * Chinese people, people of Chinese nationality, citizenship, and/or ethnicity **''Zhonghua minzu'', the supra-ethnic concept of the Chinese nation ** List of ethnic groups in China, people of ...
engaged in agriculture. The largest timber concession, Oriental Timber Corporation (OTC), is Indonesian owned. There also are significant numbers of
West Africa West Africa or Western Africa is the westernmost region of Africa. The United Nations defines Western Africa as the 16 countries of Benin, Burkina Faso, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, M ...
is engaged in cross-border trade. Legal monopolies are possible; for example, Cemenco holds a monopoly on
cement A cement is a binder, a chemical substance used for construction that sets, hardens, and adheres to other materials to bind them together. Cement is seldom used on its own, but rather to bind sand and gravel ( aggregate) together. Cement mi ...
production. Unlike almost all other countries in the world, Liberia has not adopted the
metric system The metric system is a system of measurement that succeeded the decimalised system based on the metre that had been introduced in France in the 1790s. The historical development of these systems culminated in the definition of the Interna ...
as its primary system of measurement.


Forestry

Timber Lumber is wood that has been processed into dimensional lumber, including beams and planks or boards, a stage in the process of wood production. Lumber is mainly used for construction framing, as well as finishing (floors, wall panels, w ...
and
rubber Rubber, also called India rubber, latex, Amazonian rubber, ''caucho'', or ''caoutchouc'', as initially produced, consists of polymers of the organic compound isoprene, with minor impurities of other organic compounds. Thailand, Malaysia, an ...
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

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. 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. An additional 13 ultra-deep offshore blocks were demarcated in 2011 and planned for auction. Among the companies to have won licenses are Repsol YPF, Chevron Corporation, and
Woodside Petroleum Woodside Energy Group Ltd (formerly Woodside Petroleum Ltd) is an Australian petroleum exploration and production company. Woodside is the operator of oil and gas production in Australia and also Australia's largest independent dedicated oil a ...
.


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 Flag of convenience (FOC) is a business practice whereby a ship's owners register a merchant ship in a ship register of a country other than that of the ship's owners, and the ship flies the civil ensign of that country, called the flag state ...
. Liberia has the second-largest maritime registry in the world behind
Panama Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a transcontinental country spanning the southern part of North America and the northern part of South America. It is bordered by Co ...
, with 4,300 vessels registered under its flag accounting for 12% of ships worldwide. 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 The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
, Sweden,
Britain Britain most often refers to: * The United Kingdom, a sovereign state in Europe comprising the island of Great Britain, the north-eastern part of the island of Ireland and many smaller islands * Great Britain, the largest island in the United King ...
,
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,
Italy Italy ( it, Italia ), officially the Italian Republic, ) or the Republic of Italy, is a country in Southern Europe. It is located in the middle of the Mediterranean Sea, and its territory largely coincides with the homonymous geographical ...
,
Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
, the
People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, and
Romania Romania ( ; ro, România ) is a country located at the crossroads of Central, Eastern, and Southeastern Europe. It borders Bulgaria to the south, Ukraine to the north, Hungary to the west, Serbia to the southwest, Moldova to the east, and ...
. But because of the Liberian Government's perceived disregard for
human rights Human rights are moral principles or normsJames Nickel, with assistance from Thomas Pogge, M.B.E. Smith, and Leif Wenar, 13 December 2013, Stanford Encyclopedia of PhilosophyHuman Rights Retrieved 14 August 2014 for certain standards of hu ...
, foreign assistance to Liberia has declined drastically. The
Republic of China (Taiwan) Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the northeast ...
and
Libya Libya (; ar, ليبيا, Lībiyā), officially the State of Libya ( ar, دولة ليبيا, Dawlat Lībiyā), is a country in the Maghreb region in North Africa. It is bordered by the Mediterranean Sea to the north, Egypt to the east, Suda ...
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

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."Media Environment and Regulation in Liberia"
, AudienceScapes. Retrieved 8 February 2014.


Energy

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 Greater Monrovia is one of four districts located in Montserrado County, Liberia. It contains the country's capital Monrovia. It recorded a population of 970,824 in the 2008 census. Greater Monrovia has no official administrative status. Unlike ot ...
. The vast majority of electric energy services is provided by small privately owned generators. At $0.54 per kWh, the
electricity tariff Electricity pricing (also referred to as electricity tariffs or the price of electricity) can vary widely by country or by locality within a country. Electricity prices are dependent on many factors, such as the price of power generation, gover ...
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.


International economic networks

Liberia is a member of the
Economic Community of West African States The Economic Community of West African States (ECOWAS; also known as in French and Portuguese) is a regional political and economic union of fifteen countries located in West Africa. Collectively, these countries comprise an area of , and in ...
(ECOWAS). With Guinea and
Sierra Leone Sierra Leone,)]. officially the Republic of Sierra Leone, is a country on the southwest coast of West Africa. It is bordered by Liberia to the southeast and Guinea surrounds the northern half of the nation. Covering a total area of , Sierr ...
, it formed the
Mano River Union The Mano River Union (MRU) is an international association initially established between Liberia and Sierra Leone by the 3 October 1973 Mano River Declaration. It is named for the Mano River which begins in the Guinea highlands and forms a border ...
(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 Firestone Natural Rubber Company, LLC is a subsidiary of the Bridgestone Americas, Inc. Headquartered in Nashville, TN, the company operates the largest contiguous rubber plantation in the world in Harbel, Liberia, which first opened in 1926. H ...
*
United Nations Economic Commission for Africa The United Nations Economic Commission for Africa (UNECA or ECA; french: link=no, Commission économique pour l'Afrique, CEA) was established in 1958 by the United Nations Economic and Social Council to encourage economic cooperation among its ...


References


External links


68% of Liberians live in poverty census reveals
*


Liberia latest trade data on ITC Trade Map

Liberia profile
- World Bank {{Africa in topic, Economy of Liberia