2013 Index of Economic Freedom

Liberia

overall score49.3
world rank147
Rule of Law

Property Rights30.0

Freedom From Corruption32.0

Limited Government

Government Spending77.8

Fiscal Freedom76.6

Regulatory Efficiency

Business Freedom56.5

Labor Freedom47.2

Monetary Freedom72.0

Open Markets

Trade Freedom61.4

Investment Freedom20.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 3.9 million
  • GDP (PPP):
    • $1.8 billion
    • 6.4% growth
    • 5.7% 5-year compound annual growth
    • $456 per capita
  • Unemployment:
  • Inflation (CPI):
    • 8.5%
  • FDI Inflow:
    • $508.0 million
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Liberia’s economic freedom score is 49.3, making its economy the 147th freest in the 2013 Index. Its score has increased 0.7 point from last year, with substantial improvements in trade freedom and the control of government spending. Liberia is ranked 33rd out of 46 countries in the Sub-Saharan Africa region, and its overall rating remains significantly below the world and regional averages.

Liberia’s reform-minded government has managed to place the country on a path of strong growth despite the challenging global economic environment. Reforms have dismantled some barriers to trade, simplified business licensing, and eased credit restrictions. These ongoing measures, coupled with a determination to improve economic livelihood through committed reforms, have contributed to an average growth rate of over 8 percent over the past five years.

Nonetheless, the economy still suffers from the scars of war and violence has adversely affected institutional structures, causing problems like corruption and poor protection of property rights to persist. Further reforms, particularly to allow for more vibrant flows of trade and investment, are needed to secure better prospects for long-term economic development.

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Background

Founded in 1820 by freed American and Caribbean slaves, Liberia is Africa’s oldest republic. In 1997, after an eight-year civil war, rebel leader Charles Taylor was elected president. He was a ruthless head of state and was forced to resign in 2003. Ellen Johnson Sirleaf became Africa’s first democratically elected female president in 2005 and was re-elected in November 2011. In April 2012, the Special Court for Sierra Leone convicted Taylor for war crimes; he is the first former head of state to be convicted by an international tribunal since the Nuremburg trials. Unemployment and illiteracy are high, and political instability, conflict, and international sanctions have destroyed most large businesses and driven out many foreign investors and enterprises. Rubber exports and the world’s second-largest maritime registry generate major income. Private and public creditors have forgiven billions of dollars of loans to reduce Liberia’s substantial public debt.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 32.0 Create a Graph using this measurement

Property rights are not strongly protected, and the rule of law remains uneven across the country. The judiciary lacks adequate facilities. Corruption remains endemic, but in 2012, the government imposed an asset-declaration requirement as part of a code of conduct for officials that reflects ongoing efforts to reduce bribery, control violence, and establish political stability.

Limited GovernmentView Methodology

The top income tax rate is 35 percent, and the top corporate tax rate is 25 percent. Other taxes include a property tax and a goods and services tax (GST). The overall tax burden equals 22.2 percent of total domestic income. Government spending is equivalent to 27.2 percent of GDP. The budget balance has been in deficit. Debt relief in 2010 has reduced the debt to below 15 percent of GDP.

Regulatory EfficiencyView Methodology

Considerable efforts have been made to modernize the regulatory framework. The business start-up process is more straightforward, with no minimum capital required. Fees related to completing licensing requirements, though still high, have been reduced considerably. The labor market is underdeveloped, and about 80 percent of the workforce is engaged in informal activity. Inflation has moderated, but monetary stability remains weak.

Open MarketsView Methodology

The trade-weighted average tariff rate is quite high at 11.8 percent, and slow customs procedures further restrict trade freedom. Foreign investment is permitted, but inadequate administrative infrastructure and a lack of transparency inhibit investment. The high cost of credit and scarce access to financing hold back development of the private sector. 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

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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