Liberia: Strategic Policy Options for Medium Term Growth and Development

45 Pages Posted: 20 Apr 2016

See all articles by Sebastien Dessus

Sebastien Dessus

World Bank - West Bank and Gaza Resident Mission

Jariya Hoffman

affiliation not provided to SSRN

Hans Lofgren

World Bank

Date Written: June 1, 2012

Abstract

The objective of this paper is to inform Liberia's medium-term growth and development strategy for 2012-17 and its National Vision: Liberia Rising 2030, both of which are under preparation. The analysis is based on MAMS (Maquette for MDG [Millennium Development Goal]) Simulations, a computable general equilibrium model. A base scenario (designed to represent a central case for the evolution of Liberia's economy up to 2030) is compared to a set of non-base scenarios that introduce alternative assumptions for the mining sector, government spending on infrastructure and human development, as well as foreign borrowing. The simulations, which cover the period 2012-2030, indicate that rapid expansion of mining output, front-loaded investment in infrastructure, and improved government efficiency may bring about rapid growth. The findings underscore the importance of allocative and operational efficiency of public spending. It is also important that the government balance spending on infrastructure and human development as they complement each other and face different constraints. Spending on infrastructure tends to have relatively strong and immediate growth and poverty reduction effects, whereas spending on human development has a stronger positive impact on non-poverty MDG indicators at the cost of lowered economic growth in the short to medium terms. It is important to consider that growth driven by rapid mining expansion entails drawbacks and risks, including the persistence of an enclave economy that will not benefit the majority of the population, and increased vulnerability to fluctuations in iron ore world prices.

Keywords: Economic Theory & Research, Debt Markets, Emerging Markets, Access to Finance, Labor Policies

Suggested Citation

Dessus, Sebastien and Hoffman, Jariya and Lofgren, Hans, Liberia: Strategic Policy Options for Medium Term Growth and Development (June 1, 2012). World Bank Policy Research Working Paper No. 6081. Available at SSRN: https://ssrn.com/abstract=2082772

Sebastien Dessus (Contact Author)

World Bank - West Bank and Gaza Resident Mission ( email )

P.O. BOX 54842
Jerusalem
Israel
+972 2 236 65 49 (Phone)
+972 2 236 65 43 (Fax)

Jariya Hoffman

affiliation not provided to SSRN ( email )

No Address Available

Hans Lofgren

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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