2016 Index of Economic Freedom

Liberia

overall score52.2
world rank143
Rule of Law

Property Rights25.0

Freedom From Corruption37.0

Limited Government

Government Spending67.7

Fiscal Freedom83.8

Regulatory Efficiency

Business Freedom55.1

Labor Freedom44.5

Monetary Freedom71.0

Open Markets

Trade Freedom72.8

Investment Freedom45.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 4.2 million
  • GDP (PPP):
    • $3.7 billion
    • 0.5% growth
    • 6.2% 5-year compound annual growth
    • $882 per capita
  • Unemployment:
    • 3.8%
  • Inflation (CPI):
    • 9.9%
  • FDI Inflow:
    • $302.0 million
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Liberia’s reform-minded government has managed to place the country on a path of growth despite the challenging economic environment. Reforms have dismantled some of the barriers to trade, simplified business licensing, and eased credit restrictions, contributing to an average growth rate of over 6 percent over the past five years.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 52.2 (down 0.5 point)
  • Economic Freedom Status: Mostly Unfree
  • Global Ranking: 143rd
  • Regional Ranking: 34th in Sub-Saharan Africa
  • Notable Successes: Trade Freedom
  • Concerns: Property Rights, Corruption, and Regulatory Efficiency
  • Overall Score Change Since 2012: +3.6

Progress and gains from previous reforms continue to be undermined or disrupted by institutional shortcomings. The country has little margin for dealing with crises of any sort. Further reforms, particularly strengthening the rule of law and improving regulatory efficiency, are critical to promoting long-term economic development.

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Background

In the early 1990s, civil war killed 250,000 Liberians. A peace agreement was reached in 1995, and rebel leader Charles Taylor was elected president in 1997. He was forced to step down in 2003 and was found guilty of war crimes in 2012. Ellen Johnson Sirleaf, president since 2005, was awarded the Nobel Peace Prize in 2011. Liberia remains fragile. In 2013, the United Nations Refugee Agency repatriated 155,000 Liberians who had fled during the civil war. Rampant corruption, high unemployment, and widespread illiteracy hinder development. Political instability has driven out many foreign investors. Liberia is rich in natural resources, including rubber, mineral resources, and iron ore. It was one of the countries hit hardest by the 2014 Ebola outbreak in West Africa.

Rule of LawView Methodology

Property Rights 25.0 Create a Graph using this measurement

Freedom From Corruption 37.0 Create a Graph using this measurement

Corruption remains pervasive. Liberia was the first African state to comply with the Extractive Industries Transparency Initiative rules governing natural-resource extraction, and a number of institutions are devoted to fighting corruption, but they lack the resources and capacity to function effectively. The judiciary lacks adequate facilities. Property rights are not strongly protected, and the rule of law remains uneven across the country.

Limited GovernmentView Methodology

Liberia’s top individual and corporate income tax rates are 25 percent. Other taxes include a property tax and a goods and services tax. The overall tax burden equals 19.2 percent of total domestic income. Government spending is equivalent to 32.8 percent of GDP. The budget has been in chronic deficit. Public debt amounts to about 33 percent of total domestic output.

Regulatory EfficiencyView Methodology

Considerable effort has been made to modernize the regulatory framework. The business start-up process is more straightforward, with no minimum capital required. The labor market is underdeveloped, and about 80 percent of the workforce is engaged in informal activity. Following the Ebola crisis, the government increased subsidies for education and health care and received higher levels of subsidized food aid from international donors.

Open MarketsView Methodology

Liberia’s average tariff rate is 6.1 percent. Several sectors of the economy are reserved for domestic investors. Foreign investors may not own land. The government may not expropriate property without providing compensation. The high cost of credit and scarce access to financing hinder private-sector development. A large part of the population remains outside of the formal banking sector.

Country's Score Over Time

Bar Graph of Liberia Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Liberia to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Mauritius74.7-1.7
2Botswana71.11.3
3Cabo Verde66.50.1
4Rwanda63.1-1.7
5Ghana630.0
6Seychelles62.24.7
7South Africa61.9-0.7
8Namibia61.92.3
9Madagascar61.1-0.6
10Côte d'Ivoire 601.5
11Swaziland59.7-0.2
12Benin59.30.5
13Uganda59.3-0.4
14Burkina Faso59.10.5
15Gabon590.7
16Zambia58.80.1
17Tanzania58.51.0
18Senegal58.10.3
19Kenya57.51.9
20Nigeria57.51.9
21The Gambia57.1-0.4
22São Tomé and Príncipe 56.73.4
23Mali56.50.1
24Djibouti56-1.5
25Mauritania54.81.5
26Niger54.3-0.3
27Cameroon54.22.3
28Burundi53.90.2
29Togo53.60.6
30Guinea53.31.2
31Mozambique 53.2-1.6
32Comoros52.40.3
33Sierra Leone52.30.6
34Liberia52.2-0.5
35Guinea-Bissau51.8-0.2
36Malawi51.8-3.0
37Ethiopia51.50.0
38Lesotho50.61.0
39Angola48.91.0
40Democratic Republic of Congo46.41.4
41Chad46.30.4
42Central African Republic45.2-0.7
43Equatorial Guinea43.73.3
44Republic of Congo 42.80.1
45Eritrea42.73.8
46Zimbabwe38.20.6
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