Reviving Economic Growth in Liberia - Working Paper 133

Liberia was decimated by 25 years of gross economic mismanagement and 14 years of brutal civil war. GDP fell by over 90% in less than two decades, one of the largest economic collapses in the world since World War II. In this new working paper, senior fellow Steve Radelet, who is serving as an advisor to Liberian president Ellen Johnson Sirleaf, explores the challenges Liberia faces in reinvigorating rapid, inclusive and sustained economic growth. He examines the new government's progress so far, including the major steps it has taken in its first 18 months and the unique way that it has organized government-donor relations.

Radelet examines the patterns of post-conflict recovery in several other African countries as a basis for examining the potential for renewed growth in Liberia. He suggests that Liberia's recovery is likely to proceed in three phases (i) an immediate phase driven by donor flows and a rebound in urban services, (ii) the renewal of traditional natural resource-based activities, and (iii) medium-term development of downstream processed products, other manufactures, and services that can compete on global markets.

Radelet argues that the single highest priority for the economy is rebuilding infrastructure, especially roads, which are crucial for maintaining security, connecting farmers to markets, creating jobs, opening concession areas, reducing costs for manufacturing, and effectively delivering basic health and education services. Other key priorities include effectively managing natural resource production; improving the business climate; and investing in education and training programs to improve the skills of Liberian workers over time.