So, once again, what is needed is state intervention. Purists say this would violate the sanctity of the contract. But there are times when the public interest requires us to honor the rule of law in the breach. Such procedures were seldom stigmatized as default. Another objection to such a procedure is that it would reward the imprudent.
The issue, then, becomes one of fairness: Why help the imprudent when the prudent are struggling too? One solution would be for the government-controlled mortgage lenders and guarantors, Fannie Mae and Freddie Mac, to offer all borrowers — including those with fixed rates — the same deal. Permanently lower monthly payments for a majority of U.
No doubt those who lost by such measures would not suffer in silence. But the benefits would surely outweigh the costs to bank shareholders, bank bondholders and the owners of mortgage-backed securities. Americans, Winston Churchill once remarked, will always do the right thing — after they have exhausted all other alternatives. If we are still waiting for Keynes to save us when Davos comes around next year, it may well be too late. Only a Great Restructuring can end the Great Repression. It needs to happen soon. BANGKOK — Stimulus packages being put in place by many export-dependent nations in Southeast Asia may not do enough to protect those economies from the consequences of the fundamental shift in trading patterns that underlies the current financial crisis, analysts warn.
The exporting nations have taken slightly different paths in attempting to combat the global slowdown, but all their packages rest on a similar assumption: that the world economy will pick up in the third quarter, causing things to return to normal. In a world dominated by born-again Keynesians, deficit-funded stimulus packages are all the rage.
In Southeast Asia, there have been a variety of approaches: Vietnam has chosen to support industry, Thailand is trying to mitigate the effects on the most vulnerable, and Singapore has gone for a mixture of the two. For the countries in the middle, the scale of the problems they face appears to have blunted governmental ambitions. His biggest fear, he said, is that the global economic revival will not come soon enough. Some analysts have said that the packages raise two questions: What effect will they have on domestic demand?
Compared with the rest of the world, Asia has very high savings rates, which are considered likely to rise, given the present mood of uncertainty. If the problem were merely a short-term one, export companies could probably weather the storm with government help, but according to Supavud, the Phatra Securities analyst, a long-term structural shift in the global economy means that the demand profile for Asian exports will never return to its pre-crisis form.
Economists say it is better off than most, thanks to its lower dependence on exports, particularly manufactured products. Economic growth, which was about 6 percent last year, is expected to slow to 4. At the other end is Singapore, which has seen domestic exports shrink and is already in recession. For some years it has been deliberately strengthening its ties with major Asian markets: Since , it has signed trade pacts with China, Japan and South Korea , among others.
While many regional businesses are currently concentrating on survival, Hui warned, they need to look ahead, as well. If they are too concentrated on the U. A spectre is rising. To bury it again, Barack Obama needs to take the lead. Should governments prop up credit markets by offering guarantees or creating bad banks? Probably both. What package of fiscal stimulus would be most effective? It varies from one country to the next. Should banks be nationalised? Yes, in some circumstances.
Only the foolish and the partisan have rejected or embraced any solutions categorically. But the re-emergence of a spectre from the darkest period of modern history argues for a different, indeed strident, response. Economic nationalism—the urge to keep jobs and capital at home—is both turning the economic crisis into a political one and threatening the world with depression.
If it is not buried again forthwith, the consequences will be dire. Trade encourages specialisation, which brings prosperity; global capital markets, for all their problems, allocate money more efficiently than local ones; economic co-operation encourages confidence and enhances security. Yet despite its obvious benefits, the globalised economy is under threat.
Around the world, carmakers have lobbied for support see article , and some have got it. A host of industries, in countries from India to Ecuador, want help from their governments. The grip of nationalism is tightest in banking see article. Since banks are reducing overall lending, that means repatriating cash.
Regulators are thinking nationally too. Switzerland now favours domestic loans by ignoring them in one measure of the capital its banks need to hold; foreign loans count in full.
Governments protect goods and capital largely in order to protect jobs. Around the world, workers are demanding help from the state with increasing panic. In France more than 1m people stayed away from work on January 29th, marching for jobs and wages. In Greece police used tear gas to control farmers calling for even more subsidies. On the first point, some damaged banks may feel safer retreating to their home markets, where they understand the risks and benefit from scale; but that is a trend which governments should seek to counteract, not to encourage.
In this case, however, the costs could be enormous. For the third argument—that protectionism will not get very far—is dangerously complacent.
True, everybody sensible scoffs at Reed Smoot and Willis Hawley, the lawmakers who in exacerbated the Depression by raising American tariffs. But reasonable people opposed them at the time, and failed to stop them: 1, economists petitioned against their bill. Certainly, global supply-chains are more complex and harder to pick apart than in those days.
But when nationalism is on the march, even commercial logic gets trampled underfoot. World trade may well shrink this year for the first time since Even if there were no policies to undermine it, globalisation is suffering its biggest reversal in the modern era. Politicians know that, with support for open markets low and falling, they must be seen to do something; and policies designed to put something right at home can inadvertently eat away at the global system.
American plans to monitor domestic bank lending month by month will encourage lending at home rather than abroad. As countries try to save themselves they endanger each other. The big question is what America will do. At some moments in this crisis it has shown the way—by agreeing to supply dollars to countries that needed them, and by guaranteeing the contracts of European banks when it rescued a big insurer. They would not even boost American employment in the short run, because—just as with Smoot-Hawley—the inevitable retaliation would destroy more jobs at exporting firms.
And the political consequences would be far worse than the economic ones. They would send a disastrous signal to the rest of the world: the champion of open markets is going it alone. Mr Obama should veto the entire package unless they are removed. And he must go further, by championing three principles. Co-ordination is good economics, as well as good politics: combined plans are also more economically potent than national ones.
The second principle is forbearance. Similarly, financial regulators should leave the re-regulation of cross-border banking until later, at an international level, rather than beggaring their neighbours by grabbing scarce capital, setting targets for domestic lending and drawing up rules with long-term consequences now. The third principle is multilateralism. They need the structure and the resources to do so. When economic conflict seems more likely than ever, what can persuade countries to give up their trade weapons?
American leadership is the only chance. The international economic system depends upon a guarantor, prepared to back it during crises. In the 19th century Britain played that part. Nobody did between the wars, and the consequences were disastrous. Partly because of that mistake, America bravely sponsored a new economic order after the second world war.
Once again, the task of saving the world economy falls to America. Mr Obama must show that he is ready for it. This article appeared in the February 23, edition of The Nation. He doubts that citizens will get much protection from moguls—or from most economists, for that matter—unless we trouble to grasp how the whole intricate game works, so that our legislators will form a consensus about how to regulate it. He could not have chosen a worse time for prophesy than the end of the millennium.
What about the problems that had recently hobbled other economies?
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Then again, most thought, what did the Japanese, with their computerless offices and hierarchical keiretsu , have to do with entrepreneurial, Lotus Notes-enveloped us? What board member of an American insurance company—wired with information, faithful to shareholder value—would allow its executives to underwrite high-risk bets, or indeed any transactions, without appropriate reserves? The digerati, successive presidents of the United States—Andrea Mitchell, too!
The Return was, as things turned out, the last book Krugman published before breaking onto the New York Times op-ed page, from which he has persisted in calls for predictability, simplicity and safety for salaried citizens who have better things to do than maximize their utilities all day long. Various governments, even those trying to play by the rules of fiscal conservatives, were confronted with terrible choices: either decline to print money, endure recession and let ordinary people suffer now; or print money, discourage investment and cause them to suffer later.
The second polemic draws parallels between what happened in these places and what might happen—actually, what is happening—in America, Europe and more developed parts of the world, suggesting what dislocations to expect and remedies to pursue. How, in particular, might revolutionary changes in information technology—producing changes in the structure of corporations and their terms of competition—yield a changing financial pattern? Or how might those changes entail a revised superintending of the business cycle? What interests him, mainly, are the financial traces left by investors acting on assumed changes in the commercial environment; and what compels him is how governments might respond to any consequent exuberance.
And if the third were better—as good as Krugman could have made it—the second would be even more convincing. Before the current crisis, this took about four years. Two generations ago, about 60, businesses started up in the United States every year; before the crisis, that number was closer to a million. The co-op was established by savvy Capitol Hill professionals, whose decency and respect for rules could not be doubted.
It issued scrip to govern member obligations—some of which couples got upon joining—entitling bearers to a half-hour of baby-sitting. Members, not surprisingly, earned scrip by sitting for a corresponding time. So far, so good. But then statics became dynamics. Demand was greater than supply on weekends. You get the idea. What such financial perturbations need is a kind of gyroscope, government monitors to throw compensatory weight around: a central bank to lower or raise interest rates, in effect determining the amount of money in circulation, or a ministry of finance to, say, peg the currency or allow it to float.
Presumably, if the co-op had wanted an IMF loan to buy a laptop, it would have had to promise never to increase the amount of scrip coming out of its little print shop. Much of the rest of The Return is a series of stories about government efforts to intervene the way the co-op executive did, though the playful tone understandably disappears. In every case, one finds the same disturbing, circular pattern—financial problems for companies, banks and households; leading to a general loss of confidence among usually foreign investors; leading to a plunging currency, rising interest rates and a slumping economy; leading to financial problems for companies, banks and so on.
So peasants moved to urban jobs, local banks and businessmen began to invest in new construction and the economy started growing by 8 percent a year. Global capital markets responded: after all, communism had been defeated, and interest rates were very low in Japan and Europe. Just how did money get from Tokyo to Bangkok? This is a central element of the plot.
This led to a growing demand for baht and should have made its value rise—assuming the currency had been allowed to float.
But to attract investment to its hitherto neglected part of the world, the Thai government had decided to maintain a stable rate of exchange between the baht and the dollar. So the Bank of Thailand increased the supply of baht and simultaneously bought foreign exchange—increasing its reserves.
Unavoidably, it also expanded domestic credit, since banks in which the converted baht were deposited became eager to lend. All of which meant new financing for construction projects, which brought new foreign lending and so on. The inevitable result was a construction bubble. The Bank of Thailand tried to dampen things a bit by borrowing back much of the baht that wound up in foreign banks. But this stopgap only drove up domestic interest rates, making borrowing from abroad even more attractive and bringing in more yen.
The central bank might simply have let the baht rise, as many American economists are insisting the Chinese yuan should today. But this would have meant making Thai exports the stuff Japanese companies had come to assemble more expensive in foreign markets—in effect, killing the goose to slow the production of golden eggs. Then again, too much gold brings tragedy of a different kind. Eventually—Krugman beautifully lays this out—surging investment such as imported equipment for construction and consumer spending imported TVs and cars for newly affluent Thais slowed export growth relative to imports.
The asymmetry is mind-boggling. The government has liquidated some parastatals, privatized others, and improved the management of many of those remaining under state control. The company has been slated for privatization since Only the foolish and the partisan have rejected or embraced any solutions categorically. Governments, Krugman shows, are left with contradictory choices. We have found that structural Cooperative Learning, being firmly grounded in social constructivism, offers a unique tool to teach learners to cope with opposing viewpoints and provides tools to de- construct messages, discovering and working outwards from their own understanding. The genius of Deng is that when he put China on the path to a market economy 30 years ago, he knew the country needed a stable political system [to withstand the changes of reform].
This created a huge balance-of-payments deficit. Thais began using foreign currency loans to pay for imported consumer goods, while the central bank used its foreign currency reserves to defend the baht. In July the Thai expansion finally reached its limit; the economy began imploding.
The central bank, its reserves depleted, let its currency go: the value of the baht against the dollar fell as much as 50 percent over a few months. This proved catastrophic, engendering a recession not only in Thailand but in Korea and Malaysia as well—a kind of sympathetic pain, as global investors pulled back in panic. The region began to experience what countries as different as Argentina and Israel had suffered in the s.
A lot. Much of our trade with China, for example, has been internal to world-spanning American companies, which capture the value of designing and marketing a product, and go to China only for common components and final assembly. Also, the US economy is more resilient than a dozen Thailands: Krugman notes particularly the incomparable mobility he might have added upward mobility of American labor.
And the American government has not had to defend its currency the way the Thais did. Still, there are important symmetries in the performance of financial players. The people who ran them were mostly the relatives of ministers and other high officials. They were not financial whizzes but reasonably supposed that the Thai government would force taxpayers to bail out companies whose loans went sour. At the same time, their political connections were a balm to investors. On the whole, they profited from the upside, making fortunes that encouraged them to keep making loans, while feeling insulated from the downside—alas, until the whole artifice collapsed, by which time they were rich anyway.
Which brings us to another predatory financial player—one that will attack Western economies as readily as emerging ones and that can make any crisis worse. Hedge funds, it turns out, certainly do face moral hazards; indeed, they force hazards on all of us.
All fund managers, like CEOs, are rewarded for their gaining above-average returns, but how can all returns be above average? These are the waters in which hedge funds prey. But when losses are big enough, and panics wide enough, they engender slumps in production, employment—happiness—for a whole nation. What is the way out of crisis? Governments, Krugman shows, are left with contradictory choices. As the only driver of demand left standing, governments become indispensable investors.
And he thinks recovery is bound to be prolonged. Still, we cannot really understand what the state needs to do unless we understand how forces outside the financial system drive the real economy these days. What investments should government make apart from recapitalizing, reregulating and reprivatizing banks? This part of The Return is sketchy and leaves one wondering if stories about developing economies help that much. There are two points I wish Krugman had made in the book, things he seems to believe based on much of what he has written and said about the auto industry in recent months.
The first is that emerging countries may be like us in the circulation of financial capital but are quite unlike us in the circulation of intellectual capital—the more important kind, after all. To recover, those countries focused mainly on their financial systems because they were keen to attract not just foreign money to their capital markets but the know-how of global corporations to their cities. The key was to turn foreign investments in plant complexes, or software houses, or management teams, into engines of civil society, so that a new class of globally competitive entrepreneurs might be born.
You would not know this from The Return. But macroeconomics as a profession often seems indifferent to the ways production innovations drive economies, at least compared with ambient financial conditions. You imagine macroeconomists advising farmers to concern themselves mainly with forecasting the weather. What if somebody in the co-op had invented a robot to baby-sit? Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
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President Tubman, affectionately called "Uncle Shad," died at the age of 74, after 27 years in office. He was known as the "Maker of Modern Liberia" for his open door policy of unrestricted foreign investment and his Unification Policy. Upon his death in , Vice-President William R.
Tolbert, Jr. Tolbert was nominated by the True Whigs, Liberia's only legal political party , and, having been elected without opposition in October , was inaugurated for an eight-year term in January Unfortunately, Tolbert's term coincided with a deep economic depression, which sparked Liberia's colonial revolution.
The meeting turned violent resulting in looting. Tolbert was forced to subsidize rice to restore order, a sign that the True Whig government was coming to an end. On 12 April army enlisted men staged a coup. Tolbert and at least 26 supporters were killed in the fighting. Thirteen officials were publicly executed 10 days later. Samuel K. Doe, a Krahn tribesman, became head of state. Doe suspended the constitution, but a return to civilian rule was promised for Despite two coups attempts in , the government declared an amnesty for all political prisoners and exiles.
Forty political prisoners were released in September of that year, and another 20 were released in December. A draft constitution providing for a multiparty republic was issued in and approved by referendum in Foreign observers declared the elections fraudulent, and most of the elected opposition candidates refused to take their seats. In November , military leader Thomas Quiwonkpa and an estimated to people died in an unsuccessful coup attempt — the seventh since Doe took power. Krahn troops retaliated, killing thousands of Gio, considered supporters of the coup leaders.
The rebel invasion soon pitted ethnic Krahn sympathetic to the regime against those victimized by it, Gio and Mano. Thousands of civilians were massacred on both sides. Hundreds of thousands fled their homes. By June , Taylor's forces laid siege to Monrovia. Johnson quickly controlled parts of Monrovia prompting evacuation of foreign nationals and diplomats by the US Navy in August.
Exiled members of Liberia's leading political parties and associations elected Dr. Within days clashes erupted. On 9 September , Johnson's forces captured Doe at the port. His torture and execution were videotaped by his captors. Sawyer was able to establish his authority over most of Monrovia, but the rest of Liberia was in the hands of various factions of the NPFL or of local gangs.
Repeated attempts to get Taylor and Johnson to cooperate with Sawyer proved fruitless. The war spilled into Sierra Leone, further complicating peacemaking and peacekeeping efforts. In April , violence escalated in Monrovia. Roving gangs of heavily armed, leaderless teenagers recklessly sprayed the city with machine-gun fire and grenade launchers. More than 3, people were killed in the next two months and nearly every building in the capital suffered damage.
Looters targeted international relief organizations for their radios, medicines, and cars. Meanwhile, it was apparent that disagreements over establishing an electoral commission and other difficulties in preparations would delay the proposed elections. On 19 July some international observers, including former US president Jimmy Carter , monitored the elections. They reported peaceful, mostly free and fair elections, although runners-up Johnson-Sirleaf and Kromah complained of irregularities.
The official results gave Taylor the victory with On 2 August Taylor was inaugurated. He appointed a cabinet with some members of the transitional administration, and he established a nine-member national security council to maintain civil order. In July , Taylor presided over the burning of a huge stockpile of weapons. By May , much of Liberia was still in ruins, but international donors had made some progress in restoring agricultural production, reintegrating ex-combatants, and helping refugees and internally displaced persons resettle in their home areas.
Renewed fighting in led to a declaration of a state of emergency on 8 February Taylor lifted the emergency in September , but by February-March , the Liberians United for Reconciliation and Democracy LURD had made gains deep into territory previously held by government troops. On 17 June, the two sides signed a cease-fire with commitments to a transition government without Taylor, but three days later Taylor declared that he would serve out his term to January with the possibility of seeking reelection.
On 11 August , Taylor succumbed to international pressure, handed power over to his vice president, Moses Blah, and sought asylum in Nigeria where he has remained in exile. A National Transitional Legislative Assembly NTLA , composed of warring factions, political parties, representatives of the counties, special interests, and civil society, replaced the House of Representatives and the Senate.
The mandate was later extended until March UNMIL began to demobilize and disarm combatants, but because donors underestimated the number of soldiers, funds were insufficient to implement rehabilitation and reintegration. Repatriation through the United Nations High Commissioner for Refugees UNHCR of the estimated , Liberian refugees has been slow, but some , refugees were thought to have returned on their own. The political transition formally ended following the 11 October election between front-runners George Weah, an internationally renowned soccer football player, and Ellen Johnson-Sirleaf, a Harvard-educated international civil servant and national politician.
Despite protests of fraud by Weah's youthful supporters of the Congress for Democratic Change CDC , Johnson-Sirleaf was declared the winner on the 8 November second-round ballot with The new government was formed on 6 January , making Johnson-Sirleaf Africa's first woman head of state. Pressure for Taylor's extradition to face trial for alleged war crimes was mounting into In addition, over African and international human rights and activist groups and the UN High Commissioner for Human Rights demanded his extradition.
However, unless sufficient evidence supporting the allegations was available, Nigeria stated that it would not hand Taylor over. In February , it was announced that Johnson-Sirleaf had inaugurated a Truth and Reconciliation Commission to investigate human rights abuses committed — , marking the end of civil war. The Liberian republic is modeled after the United States. Its constitution approved on 3 July and effective 6 January , provides for a president and vice president elected jointly by universal suffrage at age 18 for a six-year term with a limit of two consecutive terms.
Candidacy is again allowed after the lapse of at least one term. The president is both the chief of state and head of government. He or she nominates judges from a list submitted by a commission, serves as commander-in-chief of the armed forces, and has the right to veto legislation. Vetoes can be overridden by a two-thirds vote of both legislative houses.
The legislature is divided into a Senate, its 26 members elected by counties for nine years, and a House of Representatives, its 64 members elected by equally apportioned constituencies for six years. The constitution proscribes the one-party state and guarantees fundamental rights, such as free speech, press, and assembly. The president has the right to suspend certain rights by declaring a state of emergency in cases of war or serious civil unrest.
A state of emergency, which must be confirmed by a two-thirds vote of both legislative houses, does not empower the president to suspend or abrogate the constitution, dissolve the legislature, suspend or dismiss the judiciary, or suspend the right of habeas corpus. The constitution guarantees fundamental freedoms to all persons irrespective of ethnic background. But because of the country's unique history, the constitution stipulates that "only persons who are Negro or of Negro descent shall qualify by birth or by naturalization to be citizens of Liberia," and only citizens may own land.
The president and all members of the legislature were formerly members of the True Whig Party, which was organized in and held power continuously from to Although all political activity was banned, many True Whig members retained their government posts. Doe, was victorious in the elections. The UPP was not allowed to field candidates in but was legalized in In May , the opposition led by Dr. Togba-Nah Tipoteh, formed a loose coalition of eleven entities called the Collaborating Political Parties CPP , which aimed to present a common candidate in In mid, several key opposition leaders including Ellen Johnson-Sirleaf met in Abuja, Nigeria to discuss political strategies.
The opposition made a number of demands, which it advanced as pre-conditions before going to elections. Among these were the restructuring the armed forces as stipulated by the Abuja Accords, holding elections for chiefs and mayors, conducting a census, dissolving NPP party cells in the civil service , stopping 'illegal' funding of the NPP, guaranteeing opposition parties equal air time and reconstituting the elections commission ECOM.
Opposition political activity upcountry has been virtually nonexistent because of extreme insecurity. The Unity Party held 7 House seats and 3 Senate seats. Three other parties held the 5 remaining House seats among themselves. The next presidential and Senate elections were scheduled for and House of Representatives elections for Liberia is divided into 13 counties, 2 territories, and the federal district of Monrovia.
The territories are Marshall and Gibi. The central government is supposed to appoint the county and territory superintendents. Counties are subdivided into districts headed by commissioners. There are also paramount, clan, and town chiefs. Cities elect their own mayors and councils. The legal system is closely modeled on that of the United States. The 6 January constitution provides for the establishment of a Supreme Court consisting of a chief justice and four associate justices, to be appointed by the president from a panel recommended by a Judicial Service Commission.
The consent of the Senate is required for these appointments and for the confirmation of lower court judges, to which a similar procedure applies. In theory, cases originate in magistrates' courts and may be taken for appeal to one of 10 circuit courts or to the highest court. Serious cases originate in the circuit courts. Traditional courts are presided over by tribal chiefs. A labor court was created in For many years, the judicial system has suffered from corruption and domination by the executive.
By mid the system had collapsed and justice administration was co-opted by the military commanders of various factions. After , donors trained paralegals and human rights monitors to protect citizens up-country, and the US Department of Justice rebuilt magistrate courts, compiled 30 years of Supreme Court decisions, and published the Liberian Code so that judges and lawyers could have recourse to those decisions. Rebuilding the courts was expected to become a major thrust of the Johnson-Sirleaf government.
As of , active armed forces numbered between 11, and 14, personnel, including militias supportive of the government. Plans for a reorganized military include an army, navy, and an air force. Liberia has participated in various African conferences and has advocated a cooperative association of African states to further such matters of mutual concern as public health , education, and trade.
Leaders of the three countries signed a nonaggression and antisubversion pact in Technical assistance activities of the UN in Liberia have emphasized agricultural development, teaching, vocational training, and control of yaws and malaria. Liberia is part of the Nonaligned Movement. The Liberian economy has come to a virtual standstill since civil war broke out in The country has an agricultural economy with the majority of the population earning its living in this sector.
The principal crops are rice, cocoa, coffee, palm oil , sugar cane, and cassava. Financial mismanagement and the effects of civil war have divided the country into two economic zones, one centered in and around the major urban centers, the other comprising the bulk of the country's rural hinterland. Although the country is rich in natural resources — particularly minerals gold, diamonds, and iron ore and forests — little investment has entered the country since hostilities began.
The Abuja peace accords initially provided some hope of an economic recovery in the coming decade, but fighting broke out again in and was ongoing in In August , a comprehensive peace agreement ended 14 years of civil war and led to the resignation of former president, Charles Taylor, who was exiled to Nigeria.
After two years of rule by a transitional government, democratic elections in late brought President Ellen Johnson-Sirleaf to power. However, the security situation is still volatile and the process of rebuilding the social and economic structure of this war-torn country remains sluggish. Even prior to the civil war, Liberia faced serious financial problems. Deficits created in the s were deepened by a wave of military spending resulting from the coup. To try to compensate, cuts in civil service salaries and currency manipulation were used as policy tools.
A US-led effort to bring better fiscal management to the Liberian economy failed, and in the World Bank closed its offices in Monrovia.
The civil war has left most of Liberia's infrastructure in shambles. Businessmen and capital have left the country and continuing turmoil has prevented normal economic life. The remaining economic assets were plundered or destroyed by factional forces. In addition, President Charles Taylor's support for rebels fighting in Sierra Leone negatively impacted the climate for foreign investment. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity PPP rather than value as measured on the basis of the rate of exchange based on current dollars.
It was estimated that agriculture accounted for Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. Since the tribal people of the interior form the bulk of the population and engage primarily in subsistence agriculture, there were few skilled laborers in Liberia until recent years. Although there is still a dearth of highly skilled mechanics and technicians, an increasing number of Liberians are becoming able plant and machine operators.
Before the onslaught of civil war, the labor force totaled about 1,, persons. The principal private employer then was Firestone, with 9, employees in The policy of foreign-owned companies has been to employ Liberian labor in the first instance and to encourage the training of skilled workers, especially in mechanical pursuits. There are still shortages of middleand higher-level technicians and managerial personnel. From time to time, labor shortages are reported in large agricultural enterprises. The government has enacted a minimum wage law, but the larger employers have generally paid wages in excess of the legal minimum.
Following the first major strike in , the LCL leadership was arrested and the union dissolved. In , it was revived under the leadership of the Ministry for Social Affairs and functioned mainly as a government organ. In , there were a total of 30 functioning unions with a total of 60, members, most of whom were unemployed. Despite their organized strength, unions have little actual power. There are minimum working ages, statutory minimum wages, and occupational safety and health standards but none of these are effectively enforced.
Child labor laws are similarly not enforced, especially in rural areas. Most people engage in any work available despite wages or conditions. Before the civil war, agriculture was the main source of livelihood for the great majority of Liberians. Except on plantations operated by foreign concessionaires and wealthy Liberians, farming techniques are primitive. The "bush rotation" system of shifting cultivation is followed, in which the farmer clears up to two hectares five acres of wild forest or low bush each year, lightly cultivates it with crude hand tools, and plants rice or cassava as the rainy season begins.
Estimated production of field crops in included cassava, , tons; sugarcane, , tons; and rice, , tons. The government maintains a retail price ceiling on rice. Rice and wheat productions are insufficient to meet local needs. The rain forest soils, while well drained, are strongly leached, making Liberia better adapted to tree-crop agriculture than to annual field-crop production.
The major rubber, rice, coffee, cocoa, vegetable, and fruit producing areas lie outside of Monrovia. Rubber is the leading cash crop, with production in estimated at , tons. Before the war, six foreign-owned concessions produced over two-thirds of the rubber crop, with Firestone's Harbel plantation as the biggest in the world.
Firestone ended its long association with Liberian rubber production with the sale of its interests to the Japanese-owned Bridgestone in The principal export crops produced by small farmers are coffee, oil palm nuts, sugarcane, and fruits. Estimated production in was coffee, 3, tons; palm oil , 42, tons; and palm kernels, 11, tons. Banana production came to , tons; plantains, 42, tons. The limited number of goats and sheep does not supply an adequate amount of protein for the Liberian diet, but poultry farming and marketing of eggs are on the increase; there were an estimated 5.
Experiments in crossing West African and Brahman cattle have not yet produced breeds resistant to the tsetse fly , but the potential remains for developing good beef animals. In , Liberia had an estimated , goats, , sheep, , pigs, and 36, cattle. The fishing industry is dominated by the oceangoing trawlers of the Mesurado Fishing Co. The company also maintains a domestic distribution system that supplies a substantial amount of fish to the interior areas of the country. The total Liberian catch in was estimated at 11, tons.
In , Liberia had , hectares , acres of forest plantations. There were five major reforestation areas with a total of 4, hectares 10, acres. About timber species grow in Liberia, of which 90 are potentially marketable, but natural stands of a single species are not common. This fact, plus difficulty of access and lack of practicable means of transportation, has tended to discourage commercial logging operations, despite the known existence of such valuable woods as African mahoganies and red ironwood.
A number of foreign companies, mainly from the United States, have been granted concessions. The timber cut in yielded 5. In , mineral production in Liberia was limited to diamonds, hydraulic cement, and gold. Estimated production of gold in was 20 kg, unchanged from Diamond production in was estimated at 10, carats, down from an estimated 40, carats in , and from an estimated 80, carats in All of the country's diamond production comes from artisanal alluvial mining.
In , the country also produced hydraulic cement, of which production in was an estimated 40, metric tons, up from an estimated 25, metric tons in Liberia's undeveloped resources included barite, chromium, kyanite, manganese, nickel, palladium, platinum, titaniferous sands, and uranium. Liberia's New Mining Law of gives the Ministry of Lands, Mines, and Energy the responsibility of issuing four types of mining license — exploration, Class A for up to 25 years; are limited to 1, sq km; and are open to foreign investors , Class B for 5 years; are renewable; allow mechanized production; and are open to foreign ownership , and Class C covers artisanal mining; are good for one year intervals with expiration on December 31; and is open only to Liberians.
Eastern Liberia was made up of rocks of Birimian age with significant potential for gold. Western Liberia was made up of rocks of Archean age that contained diamond, gold, iron ore, nickel, manganese, palladium, platinum, and uranium. Liberia, as of 1 January , had no known reserves of crude oil or natural gas , and as of June , no known recoverable reserves of coal. As a result, Liberia's demand for petroleum products, natural gas , and coal are met by imports. In , Liberia's imports and demand for petroleum products each averaged 3, barrels per day. There were no recorded imports of coal in or imports of natural gas in However, Liberia has a small refining capacity, that as of 1 January was put at 15, barrels per day.
As of , all of Liberia's electric generating capacity used fossil fuels. For that year, installed capacity was put at 0. Demand for electricity in came to 0. Before the civil war, Liberia's industrial sector was dominated by processing plants associated with its key agricultural outputs: rubber, palm oil, and lumber. The Liberian-owned Mesurado Group manufactured detergent, soap, industrial gas, and animal foods. Liberia also produced soft drinks, cement, plastics, shoes, recycled steel, and refined petroleum products. In addition, Liberia's industrial base produced rice and sugar, cookies and candy, candles, foam rubber, hand tools and aluminum parts, umbrellas, and batteries.
Between and , faction leaders and business accomplices exploited the industrial wealth of the country. Using forced labor, stolen goods, and fuel, they engaged in forestry, mining, and rubber production techniques that were environmentally unsound and threatened future industrial capacity. Profits from these enterprises were used to acquire more munitions. Increased fighting in further aggravated the poor industrial climate. In , industry accounted for only 9.
The "Liberianization" law protects the production of rice, gasoline, and cement; and the operation of travel agencies, gas stations, and beer and soft drink distributors from foreign interference, despite free trade agreements. Liberia was a leading purveyor of transportation for the world's merchant fleet, but its position has declined rapidly. In , the Liberian fleet consisted of 1, vessels with a gross tonnage of The port of Monrovia was not even operational in The oil refinery at Monrovia was closed in No viable oil or natural gas deposits have been discovered, although limited oil exploration has occurred.
Liberia has an agricultural experiment station in Suakoko; a geological, mining, and metallurgical society in Monrovia; and a research laboratory for the Mt.
Nimba region, with headquarters in Robertsfield. The University of Liberia, founded in , has colleges of agriculture and forestry, medicine, and science and technology. Cuttington University College, originally founded in , has a science division, and the William V. Tubman College of Technology, founded in , offers a three-year associate degree in engineering technology. All three institutions, as well as the Liberian Institute for Biomedical Research founded in , are at Monrovia.
Booker Washington Institute offers agricultural and industrial courses. Before the civil war of — 96, internal trade was carried on mainly by large firms located in Monrovia with branches in other principal towns. However, conflict destroyed nearly all businesses and production facilities and most foreign investors left the country. The infrastructure around major cities also suffered. As of , domestic trade and manufacturing was still limited.
A small business sector has resumed operations, but primarily through Lebanese and Indian investors. The economy of the nation is highly dependent on revenues from maritime licensing and timber exports. Among rural peoples, trade is often by barter. Liberia had a history of trade surpluses before the war. Exports in were led by diamonds, followed by iron ore, rubber, and timber. Imports were led by mineral fuels, chemicals, machinery, transportation equipment, manufactured goods, and rice and other foodstuffs. Liberia has a chronic payments deficit, with large capital outflows and debt-service payments.
Since civil war broke out in , exports of foreign currency-earning raw materials iron, rubber, timber, diamonds, and gold have plummeted, and massive emergency aid operations began. In , the government established the National Bank of Liberia. It became the exclusive banker and fiscal agent of the government, introduced reserve requirements for commercial banks, and undertook their supervision.
Liberia's commercial banks had their main offices in Monrovia. The Liberian Bank for Development and Investment was established in November to provide additional mediumand long-term financial aid to worthwhile industrial projects. A National Housing and Savings Bank was established in , with priority given to low-cost public housing. An Agricultural and Cooperative Development Bank provided credit to facilitate capital investment in agriculture. In the s, Liberia was plagued by the outflow and hoarding of US dollars, the only legal notes.
In November , the chairwoman of the ruling Council of State, Ruth Perry, imposed a freeze on all government spending. She said the step was necessary to stabilize state finances and provide for civil service salaries, many of which had not been paid for months. Banks were only available as a repository for funds and did not pay interest or make loans. Government budgets, roughly in balance up to the mids, have since run heavily into deficit. Since civil war erupted in , Liberia's fiscal management has collapsed.
In recent years, Taiwan and Libya have surfaced as the largest direct donors to the Liberian government. Before civil conflict began in Liberia, concession agreements negotiated between foreign interests and the Liberian government often provided tax exemption or modification for periods of 10, or more, years after the start of operations. A moderately progressive tax on net income earned from Liberian sources by individuals, partnerships, and corporations was the largest source of government revenue.
Also levied were a sales tax of 0. In , the violent chaos into which the society had descended while waiting on the international community to send aid made most questions about the tax regime irrelevant. In recent history, Liberia's wealth has been smuggled out, not taxed. In , for instance, imports were improbably over three times the reported exports, a sign that not all exports were being reported. Imports are subject to tariff duties, ranging from 2.
Import duties are specific based on weight for some commodities, ad valorem based on cost, insurance, and freight value for others. Specific duties apply to foodstuffs, beverages, petroleum products, and certain rubber and textile products. All exports and some imports require licenses. Goods may be landed, stored, sorted, manufactured, repacked, reforwarded, or transshipped within the area of the Free Port of Monrovia without payment of customs duties, but the port was closed as of Liberia has historically maintained an "open door" policy toward foreign investment, but since this policy has given way to the protectionist practices of the government.
It has allowed a limited period of exemption from certain types of taxes and permits an unrestricted flow of dividend payments, but only in certain sectors. A "Liberalization" Law prohibits foreign ownership in many small and medium operations such as travel agencies, gas stations, beer and soft drink distributors and mandates the employment of Liberians at all levels. The law is often ignored but can also be invoked at any time.
Attempts to bring financial stability to the economy failed dramatically in the early s with the failure of the US-sponsored oversight mission and the breakdown in relations between Liberia and the IMF. Liberia plunged into a civil war from to , which besides causing upwards of , deaths and displacing hundreds of thousands, destroyed the country's infrastructure. The end of the fighting, with Charles Taylor's accession to power as the only way to deter his followers from further destruction, brought little relief since his administration did not fulfill promises to fix what they had "broke.
The free port at Monrovia continued to operate, but stevedore services have been monopolized by the National Port Authority, canceling the contracts of seven other companies. Corruption reached to the highest levels during Charles's Taylor's administration. After the civil war, some US companies resumed Firestone or began operations some gold mining companies.
However, most investors have been deterred by the regime's failure to meet IMF targets, pervasive corruption, arbitrary administration, and the reemergence of violent rebellion. The civil war and international financial obligations dim the prospects of economic development. While refugee resettlement looms as an early postwar priority, future economic development depends on reestablishing international confidence in Liberia's financial management. Foreign assistance to Liberia has declined, but Taiwan and Libya remain the largest donors of direct financial aid to the country.
Western countries avoid direct aid to the government by sending assistance through international aid agencies and nongovernmental organizations NGOs. The Plan was created by the International Contact Group for Liberia to help ensure transparent revenue collection and allocation — something that was lacking under the transitional government and that has limited Liberia's economic recovery. This plan was agreed to and officially signed into law by the chairman of the transitional government, Gyude Bryant, on September 15th, The reconstruction of infrastructure and the raising of incomes in this ravaged economy will largely depend on generous financial support and technical assistance from the donor community under GEMAP.
A social insurance and social assistance program was implemented in The current program covers public employees and employees of firms with five or more workers. The pension program is funded by equal contributions from employers and employees, while welfare is funded by the government. Work injury laws area also in place. Workers' medical benefits include reasonable expenses for medical and surgical care, hospitalization, drugs, and appliances. However, most programs and institutions were disrupted by warfare. In , after 14 years of civil war, a Harvard-educated woman was elected president of Liberia.
Ellen Johnson-Sirleaf is said to be a beacon of hope for women in Africa. However, rights for most women in the country are limited. Rural women remain largely subordinate in both public and private life. Women married under civil law have inheritance and property rights, but women married under tribal laws are considered property of their husbands. Domestic violence is widespread, and abused women have no recourse. Female genital mutilation is practiced by some ethnic groups. Ethnic discrimination is explicitly prohibited by law.
Despite this provision, citizenship is legally available only to blacks. Only citizens can own land, and noncitizens are restricted from owning certain types of businesses. The government had a poor human rights record, which includes disappearances, and beatings and torture by security forces. Liberia has one of Africa's highest fertility rates; in it averaged six children for every woman surviving through her childbearing years. Average life expectancy was As of , there were an estimated 2 physicians, 6 nurses, and 4 midwives per , people.
More recent figures are unavailable. Programs such as the Combating Childhood Communicable Diseases Program are credited with reducing mortality rates for children five and under. The infant mortality rate was The maternal mortality rate was deaths per , live births. Contraceptive use is low. The general mortality rate in was an estimated 16 per 1, people. The Liberian staple diet of rice or cassava manioc is deficient in protein and children in particular suffer because of this.
The major causes of death are malaria and gastrointestinal disease, attributable in part to poor sanitation. AIDS is a serious problem in Liberia.
There were an estimated 7, deaths from AIDS in Although the Liberian government has published policy opposing female genital mutilation, no law currently prohibits its use. In the aftermath of the — 96 civil war from, over 60, families were displaced or living in very poor housing conditions. During the s the latest period for which housing data is available , the number of dwellings more than doubled, from , in to , as of , with 4.
The — National Reconstruction Program placed housing issues as a priority for government consideration. This was followed by the formulation of a five-year plan — 05 which also focused on reconstruction and new construction of adequate housing. Many of the older corrugated-iron structures in Monrovia have been replaced with more modern dwellings, and houses of advanced design have been privately built to accommodate the growing urban population.
The typical dwelling of the tribal people in the Liberian interior is the rondavel , a circular, one-room mud-and-wattle thatch-roofed hut, windowless and with a single low door. These rondavels are being replaced by large rectangular huts, also of mud and wattle, subdivided into two or more rooms and equipped with windows. Education is compulsory from ages 6 to Elementary school primary covers six years of study.
This is followed by three years of junior high and three years of senior high school. The largest secondary school is the Booker Washington Institute, a vocational school located at Kakata, with about 1, students. The academic year runs from March to December.
The student-to-teacher ratio for primary school was at about in There are three institutions of higher learning: the government-operated University of Liberia in Monrovia established in ; Cuttington University College at Monrovia, an Episcopalian institution; and a three-year engineering school, the William V.
Tubman College of Technology, founded at Monrovia in In , there were about 44, students enrolled in tertiary education programs. The adult literacy rate for was estimated at about The government maintains a central public library in Monrovia, with 15, volumes. The University of Liberia and the Cuttington University College libraries have been slowly rebuilding their stock of books following looting during the s.
In , there were an estimated two mainline telephones for every 1, people. The same year, there was approximately one mobile phone in use for every 1, people. The first national television station was opened early in ; although government owned, it is partly commercial. The state-owned Liberian Broadcasting System operates one service that does not have national range.