2014 Index of Economic Freedom

Liberia

overall score52.4
world rank138
Rule of Law

Property Rights30.0

Freedom From Corruption33.8

Limited Government

Government Spending70.5

Fiscal Freedom83.6

Regulatory Efficiency

Business Freedom62.3

Labor Freedom47.0

Monetary Freedom72.9

Open Markets

Trade Freedom64.1

Investment Freedom40.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 4.0 million
  • GDP (PPP):
    • $2.7 billion
    • 8.3% growth
    • 6.8% 5-year compound annual growth
    • $673 per capita
  • Unemployment:
    • 85.0%
  • Inflation (CPI):
    • 6.8%
  • FDI Inflow:
    • $1.4 billion
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Liberia’s economic freedom score is 52.4, making its economy the 138th freest in the 2014 Index. Its score is 3.1 points better than last year, with notable improvements in investment freedom, fiscal freedom, business freedom, and trade freedom. Liberia is ranked 30th out of 46 countries in the Sub-Saharan Africa region, and its overall rating remains significantly below the world and regional averages.

Liberia’s economic freedom was first assessed in the 2009 Index. Since then, its overall score has advanced by 4.3 points, with improvements in seven of the 10 economic freedoms and scores for business freedom, trade freedom, investment freedom, and freedom from corruption rising by 10 points or more. Liberia has achieved its highest economic freedom score ever in the 2014 Index, moving out of the ranks of the economically “repressed.”

Despite significant progress, Liberia still lags in promoting the effective rule of law. The judicial system remains vulnerable to political interference, and property rights are not strongly protected. Lingering corruption further undermines freedom and hampers the emergence of more vibrant economic activity.

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Background

Liberia is Africa’s oldest republic. Charles Taylor, elected president in 1997 after an eight-year civil war, was forced to resign in 2003 and was convicted of war crimes by the Special Court for Sierra Leone in 2012. Ellen Johnson Sirleaf was elected president in 2005 and re-elected in 2011. In September 2012, the U.N. Security Council called for a 50 percent reduction in the number of U.N. troops in Liberia. Formal-sector unemployment and illiteracy are high, and political instability and international sanctions have destroyed most large businesses and driven out many foreign investors. Rubber exports and the world’s second-largest maritime registry generate major income. Despite over $4.6 billion in debt relief from official creditors in 2010, about 85 percent of the population continues to live below the poverty line.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 33.8 Create a Graph using this measurement

Some progress has been made in curbing corruption through code of conduct requirements, though the problem remains endemic. Property rights are not strongly protected, and the rule of law remains uneven across the country. The judiciary lacks adequate facilities. The government is drafting a Land Rights Policy to reconcile the statutory and customary land tenure systems.

Limited GovernmentView Methodology

With a cut in the individual income tax rate, both the top marginal income and the flat corporate tax rates are now 25 percent. Other taxes include a property tax and a goods and services tax. The overall tax burden is 19.8 percent of GDP. Government spending is 31 percent of gross domestic income, and public debt continues to fall below 30 percent of GDP.

Regulatory EfficiencyView Methodology

The requirements for starting a business have been simplified, but regulatory inefficiency and a lack of transparency persist. Licensing requirements still cost over three times the level of average annual income. The labor market remains inefficient, and informal labor activity is quite high. The near-term effectiveness of monetary policy is limited, given the high dollarization of the economy.

Open MarketsView Methodology

Liberia’s average tariff rate is 10.4 percent. The government restricts foreign investment in several sectors. The financial sector remains vulnerable to political influence and institutional instability. The scarce access to financing continues to impede much-needed entrepreneurial activity and private-sector development. The financial sector is dominated by banking, but 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
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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