The World Bank has released a new report titled "Escaping the Natural Resource Trap: Pathways to Sustainable Growth and Economic Diversification in Liberia." The Liberia Country Economic Memorandum, launched today in Monrovia, offers a detailed analysis of the country's economic situation. It focuses on how Liberia's susceptibility to external shocks has impacted its sustainable growth and development, with the findings aimed at supporting the ARREST Agenda for Inclusive Development (AAID).
Liberia is challenged by a "natural resource trap," where a commodity-based development model has led to cycles of stagnation and recovery. This model has left the country vulnerable due to weak long-term prosperity drivers such as human capital, wealth accumulation, and productivity. According to the study, continuing on this path would result in modest growth that is inadequate for achieving middle-income status by 2030 or significantly reducing poverty. Real per capita GDP will grow slowly, and Liberia may not reach a middle-income threshold of US$1,000 until around 2050.
"Institutional and policy reforms are essential to modernize the public sector and provide Liberia with the institutions needed to lead the transformation," said Georgia Wallen, World Bank Liberia Country Manager. "In line with the ambitions of the AAID, these reforms would entail a systemic overhaul of the business climate to promote private investment, innovation and job creation; delivery of higher quality, more efficient core public services to raise the level of human capital, notably in education and health; and increasing the efficiency and scale of public investments in power, roads and telecoms/digitalization."
The report recommends five major transformations for Liberia: reshaping its macro-economy; reducing reliance on mining by aligning activities with labor demands; recognizing private sector roles over state-centric approaches; implementing policy reforms for public sector modernization; and improving governance.
Further insights suggest that ambitious reforms could improve outcomes over time if initiated now. Such reforms include extending schooling from four years to ten years, enhancing education quality, reducing stunting rates, increasing adult survival rates, improving public service efficiency, as well as boosting private and public investments to 18% and 12% of GDP respectively. These actions could increase real GDP growth by about one percentage point annually. Consequently, Liberia might achieve lower middle-income status before 2040 with job creation potential leading real per capita GDP possibly reaching US$2,000 by 2050.