2018 Index of Economic Freedom

Liberia

overall score50.9
world rank158
Rule of Law

Property Rights28.2

Government Integrity32.0

Judicial Effectiveness42.4

Government Size

Government Spending59.4

Tax Burden77.5

Fiscal Health39.1

Regulatory Efficiency

Business Freedom53.1

Labor Freedom59.5

Monetary Freedom71.4

Open Markets

Trade Freedom72.8

Investment Freedom55.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 4.4 million
  • GDP (PPP):
    • $3.8 billion
    • 0.0% growth
    • 3.3% 5-year compound annual growth
    • $855 per capita
  • Unemployment:
    • 4.0%
  • Inflation (CPI):
    • 8.8%
  • FDI Inflow:
    • $453.2 million
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Liberia’s economic freedom score is 50.9, making its economy the 158th freest in the 2018 Index. Its overall score has increased by 1.8 points, with significant improvements in trade freedom, labor freedom, and investment freedom outpacing lower scores for the tax burden, property rights, and government spending indicators. Liberia is ranked 35th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

In the aftermath of the Ebola epidemic, the government is trying to use new mining projects and a planned expansion of electricity production to promote 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 by freed slaves 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. U.N. peacekeepers departed in 2016. Sirleaf was constitutionally limited to two terms. Former soccer star George Weah and Vice President Joseph Boakai were the top two vote-getters in the October 2017 presidential election. A November runoff was delayed to investigate dubious 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 28.2 Create a Graph using this measurement

Government Integrity 32.0 Create a Graph using this measurement

Judicial Effectiveness 42.4 Create a Graph using this measurement

Interests in property are enforced, but enforcement mechanisms are weak, and the unevenness of the rule of law is exacerbated by a precarious physical security environment. The judiciary is independent but poorly resourced. Judges and magistrates are subject to influence and engage in corruption. The poor functioning of government reflects inadequate administrative capacity and endemic corruption.

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 31.7 percent of total domestic income. Over the past three years, government spending has amounted to 36.8 percent of total output (GDP), and budget deficits have averaged 6.0 percent of GDP. Public debt is equivalent to 44.8 percent of GDP.

Regulatory EfficiencyView Methodology

The government seeks to strengthen institutions and introduce reforms to ensure an attractive business-friendly environment, but it is hampered by a weak regulatory regime and low private-sector capacity. The labor force is predominately illiterate and unskilled, and there is an acute shortage of specialized labor skills. Subsidy schemes involving more than 20 state-owned enterprises are reportedly rife with corruption.

Open MarketsView Methodology

Trade is extremely important to Liberia’s economy; the combined value of exports and imports equals 122 percent of GDP. The average applied tariff rate is 12.4 percent. Nontariff barriers impede trade. Government openness to foreign investment is below average. The high cost of credit and scarce access to financing hinder private-sector development. A large part of the population does not use the formal banking sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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