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Liberia : Strategic Policy Options for Medium Term Growth and Development

absenteeism Accounting agricultural sectors agriculture Allocative efficiency Balance of payments benchmark budget constraint budget constraints capital account capital formation capital intensity capital stock capital stocks commodities commodity Credit Facility current account current account deficit data availability debt debt capital debt interest debt stock debt stocks demand curves demand declines Developing Country Development Economics development policies development policy development strategy disposable income Domestic borrowing domestic debt domestic market domestic markets domestic price domestic prices economic activities economic growth Economic Policy education spending educational attainment educational attainments elasticity elasticity of substitution exports factor demand Factor markets factors of production finances financial resources Fixed investment foreign debt foreign debts foreign direct investment foreign exchange Foreign government Foreign interest foreign transactions full employment GDP general equilibrium Gini coefficient government borrowing Government budget government debt government investments government revenue government spending gross national savings growth rate holdings households human development income incomes inequality Information Services initial investment interest payments internal rates of return International Bank investment climate investment financing investment flow investment spending labor force labor market low-income countries marginal productivity marginal value market prices middle-income countries middle-income country mortality motivation national economy natural resources operational efficiency output outputs payment flows price change price changes price levels private capital Private investment private savings private sector development productivity increases profit maximization public spending rapid expansion rapid growth real exchange rate Real GDP real growth rates real interest real interest rates receipt receipts Returns sales revenue savings savings rate servants share of investments small country suppliers supply curve supply curves tax tax rate tax rates telecommunications total factor productivity trade deficit Transactions costs Trust Fund unemployment unemployment rate wages World Development Indicators world markets
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World Bank, Washington, DC
Africa | Liberia
2013-11-06T16:39:27Z | 2013-11-06T16:39:27Z | 2012-06

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.

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