2019 Index of Economic Freedom

Liberia

overall score49.7
world rank160
Rule of Law

Property Rights26.7

Government Integrity24.2

Judicial Effectiveness39.0

Government Size

Government Spending62.1

Tax Burden82.7

Fiscal Health69.1

Regulatory Efficiency

Business Freedom50.6

Labor Freedom38.3

Monetary Freedom68.9

Open Markets

Trade Freedom60.1

Investment Freedom55.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 4.5 million
  • GDP (PPP):
    • $6.1 billion
    • 2.5% growth
    • 2.1% 5-year compound annual growth
    • $1,354 per capita
  • Unemployment:
    • 2.4%
  • Inflation (CPI):
    • 12.4%
  • FDI Inflow:
    • $247.8 million

Liberia’s economic freedom score is 49.7, making its economy the 160th freest in the 2019 Index. Its overall score has decreased by 1.2 points, with sharp drops in government integrity, labor freedom, and trade freedom outweighing a spike in the score for fiscal health. Liberia is ranked 37th among 47 countries in the Sub-Saharan Africa region, and its overall score is well below the regional and world averages.

The new president is focused on poverty reduction, job creation, critical infrastructure needs, and agricultural development to increase food production. The government hopes that new mining projects and expanded electricity production will spur broad-based economic growth. The rule of law is not enforced effectively, and weak property rights and the judicial system’s lack of transparency seriously impede private-sector development. Sustained economic revitalization will depend on diversification, increased investment and trade, higher global commodity prices, remittances, strengthened institutions, action to combat corruption, and political stability.

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Background

Settled in the 18th century by freed slaves, predominantly from the United States, Liberia enjoyed relative peace until a long and bloody civil war that ended in 1995. Rebel leader Charles Taylor was forced to step down as president in 2003 and was later convicted of war crimes. Ellen Johnson Sirleaf became president in 2006 and stabilized the country during her two terms. U.N. peacekeepers departed in 2016. Former soccer star George Weah defeated Vice President Joseph Boakai in the 2017 presidential election following delays to investigate allegations of fraud. Liberia is rich in natural resources, including rubber, mineral resources, and iron ore, but suffers from widespread poverty.

Rule of LawView Methodology

Property Rights 26.7 Create a Graph using this measurement

Government Integrity 24.2 Create a Graph using this measurement

Judicial Effectiveness 39.0 Create a Graph using this measurement

Property rights are not strongly protected, and enforcement of contracts is a lengthy process. The judiciary is independent but weak and underresourced. The government functions poorly because of inadequate administrative capacity and pervasive corruption, although antigraft statutes have been strengthened. Liberia was the first African state to comply with the Extractive Industries Transparency Initiative.

Government SizeView Methodology

Liberia’s top individual and corporate income tax rates are 25 percent. Other taxes include property and goods and services taxes. The overall tax burden equals 21.8 percent of total domestic income. Over the past three years, government spending has amounted to 35.5 percent of the country’s output (GDP), and budget deficits have averaged 4.2 percent of GDP. Public debt is equivalent to 34.4 percent of GDP.

Regulatory EfficiencyView Methodology

Despite some legislative efforts to modernize the regulatory framework, private investment and production remain severely hampered by bureaucratic inefficiency. With the labor market not fully developed, a large portion of the workforce is engaged in the informal sector. 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

The combined value of exports and imports is equal to 121.7 percent of GDP. The most recent average applied tariff rate reported by the World Bank is 12.4 percent. Reforms have dismantled some nontariff barriers to trade, but a lack of transparency persists. Foreign investment in several sectors is restricted, and foreign investors may not own land. A large part of the population remains outside of the formal banking sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius73-2.1
2Rwanda71.12.0
3Botswana69.5-0.4
4Cabo Verde63.13.1
5Côte d'Ivoire 62.40.4
6Seychelles61.4-0.2
7Tanzania60.20.3
8Uganda59.7-2.3
9Burkina Faso59.4-0.6
10Namibia58.70.2
11South Africa58.3-4.7
12Mali58.10.5
13Ghana57.51.5
14Nigeria57.3-1.2
15Madagascar56.6-0.2
16Senegal56.30.6
17Gabon56.3-1.7
18Mauritania55.71.7
19Guinea55.73.5
20Comoros55.4-0.8
21Benin55.3-1.4
22Kenya55.10.4
23Eswatini54.7-1.2
24São Tomé and Príncipe 540.4
25Guinea-Bissau54-2.9
26Ethiopia53.60.8
27Zambia53.6-0.7
28Lesotho53.1-0.8
29Cameroon52.40.5
30The Gambia52.40.1
31Niger51.62.1
32Malawi51.4-0.6
33Angola50.62.0
34Democratic Republic of Congo50.3-1.8
35Togo50.32.5
36Chad49.90.6
37Liberia49.7-1.2
38Central African Republic49.1-0.1
39Burundi48.9-2.0
40Mozambique 48.62.3
41Sudan47.7-1.7
42Sierra Leone47.5-4.3
43Djibouti47.12.0
44Equatorial Guinea41-1.0
45Zimbabwe40.4-3.6
46Republic of Congo 39.70.8
47Eritrea38.9-2.8
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