Liberia is richly endowed with mineral resources such as Iron ore, diamond and Gold. The country also has abundant water resources, forests and climate that favors agriculture with fertile soil that grow rice, rubber, Cocoa, Coffee, Palm, Coco nut and many other cash crops. However, poor human capital and infrastructure and lack of technological innovation have impact on the exploitation of those resources. The need to transform our natural resources in an equity and transparent manner will foster economic and development growth of the country and its people. Resources curse refers to countries that underperform economically, despite benefitting from valuable natural resources. It is considered as growth without development and Liberia is not an exemption (Investopedia .com).
By: Yusuf S. Sherif, A Master Candidate, Technology Management and Economic Policy Major Seoul National University (email:[email protected])
Liberia reached it peaked in it middle income from 1960 to late 80’s. In 1972, the purchasing power of Liberia as compared to other countries, Liberia Was ranked in front of Thailand and Egypt, 107th of 163 countries, though not a rich country, but by no means poor at the time. Its GDP per capita was approximately 80% higher than that of China, Indonesia, Vietnam and India (Eric Weker and Lan Pritchett, 2014). Moreover, Liberia GDP was ranked thirteenth ahead of Senegal and Botswana in Sub – Sahara Countries. Unfortunately, in 1995, Liberia’s real income per capita fell by a staggering 93%. In 2005, Liberia’s GDP per capita was only a tenth of Egypt’s, though there was significant rebound from the trough; it also become the second – lowest income in the world, while Democratic Republic of the Congo was the least and many other nations it had once led (Eric Weker and Lan Pritchett, 2014).
Sadly, in the midst of those rich natural resource, instead of a (lower) ‘’middle – income nation’ ’Liberia is an example of poverty trap’’ nation whose political and economic order was torn apart by civil war and anarchy. Let also not forget that the civil ended at least 20 years ago. We have enjoyed two subsequent transition of our national government through competitive democratic and general election and becoming the beacon of hope for demonstrating democratic tenants in our sub – region, West Africa and Africa as a whole. The government need to ensure the practice and implementation of good governance where public official should be evaluated based on their performance to transforming our natural resource into value addition through industrialization of the country’s economy.
Subsequently, to overcome the middle – trap, policy makers consistently need to enacts structural reforms, increase funding on research and development, education, improve infrastructural development and foster an innovative environment. Our economy has many of the world multimillion companies such Firestone (1926) who have enjoyed more than a century of concession agreement and have exported millions of ton of Rubber latex in raw material, when it has the abilities to build manufacturing plants and factories to produce those latex into value addition which will attract FDI, create employment opportunity, improve technology and create a vibrant middle income class. The same apply to Sime Darby (2009), Golden Veroleum (2010), LACC (1959), Salala (1959) etc. So, in order for Liberia to break it resource curse to foster development and economic growth, the country need to identify it potential capabilities and owned it just as Korea, Singapore, Taiwan own technological innovation capabilities, Indonesia and Chile, India, Japan, Uganda, Rwanda etc did.
Eventually, building of national capabilities may be the aspect of catching – up and is most influenced by domestic policy. However, the process also depends on foreign source knowledge and technology. Developing countries like my country (Liberia) need knowledge from abroad which may flow through a variety of channels such as migration, international cooperation, trade and FDI (Jan Fagerberg et al.)
(Jan Fagerberg et al.), according to this paper, some of these flows are not mitigated through markets, such as in the case of scientific and technology cooperation with foreign government (as part of development aid). Even though, developing countries do depend on technology elsewhere, there may still be substantial scope for innovation and improving the imported technology, thus we need internal absorptive capacity.
The challenges in developing countries such as Liberia that lead to middle income trap but not limited to the following, include; income disparity, restricted access cutting- edge technology, lack of innovation, poor infrastructure, flimsy institutions, problems moving from low – cost, labor – intensive industries to advance ones and the possibility of stagnation, impeding total economic development (Eric Werker and and Lant Pritchett, 2014). However, I have previously argued during one of my presentations in a seminar at Seoul National University concerning Liberia identifying it capabilities, and I make it clear that a country won’t own it capability without ensuring efficiency in stable energy, water supply, hygiene and sanitation and major economic route connectivity, which is a major gap in Liberia. Therefore, the government need to prioritize the efficient and sustainable supply of those utilities considering it as social capability, the government should own and implement it for the livelihood of the people and stimulate development and economic growth.
According to Joint Monitoring Program (JMP, 2017), rate of utilities access in Liberia 2020, 10% of the citizen’s access safe drinking water, while 90% of the people have no access and 42% of the citizens have access to bathroom, while 58% have not. Besides, Power Africa Fact Sheet 2020, also established that 12% of households and businesses have access to electricity in the entire nation. While Monrovia the capital city and its environs access 20% of the electricity, rural areas access 3% and urban areas of the country access 16% of electricity without stability and with very high cost in the midst of abundant water resources, a major source of energy. Liberia also have the potential and alternative means of generating energy such as Solar energy farm or Wind mills energy farm, and fortunately the country has such unique environment, and climate for those alternative sources of energy. According to Statista, Liberia has the highest cost of electricity in Africa at $0.27 per kilowatt, while Ethiopia has the lowest cost at $0.1 per kilowatt. In 2020, President Modi of India invested more than 260 billion in the private sector to ensure that issues of water, hygiene, sanitation and sewage is handle. Today several millions of household in India have access to water supply and bathroom, and every 1 mile of road have access to public latrine. Therefore, efficient, cheap and stable energy as well water supply and roads connectivity drives the economic and enhance developing country identify it capability.
Now that Jeety Rubber Corporation, a company in Liberia that have signed a concession with the government in 2021 to be involve with rubber processing into value addition is welcoming. It has successfully completed the construction of a modern rubber processing plant that cost $35million and was launched in August 31, 2021 and will start it operation in two phases. According to report, phase 1, has to do with exporting technical specified processed rubber (TSR10&TSR20) that are use for products such as tires, bags and mats. While phase 2 will include the manufacturing of Rubber bands, Gloves and eventually tires with anticipated revenue for government in the amount of $40 to 50 million. Moreover, this concession has the potential of starting to the break problems of resource curse, which will positively impact employment opportunity and corporate social initiative for rural communities and its people. In essence, the national government can use Jeeety Rubber Corporation as an experiment to industrialize the economy by investing in the company, especially in R&D and technological innovation to make it more vibrant in the sub – region to attract FDI, creating jobs, building capacity and revenue generation for government. Eventually, the national government can use Jeety Rubber Corporation to own it capability by ensuring the transfer of technology to Liberians, as a model of South Korea, where the government hugely invest in Samsung, which has become the fulcrum of Korea’s economy. Because of the national government investment in Samsung Company, it has the largest employment opportunities and enhance the government own it capability in electronics and heavy equipment manufacturing. Interestingly, South Korea, Japan, Singapore and many developed countries invest heavily in R&D. South Korea budget annually for R&D is approximate 3 billion dollars. Currently in South Korea, there is serious public outcry due to budget cut in R&D. According to nature.com/ articles, 25.2% cut is planned for this year in 25 government funded research institute. If this cut happens, there is fear in the public space that this may results in the reduction of places for young researchers and students. Besides, some major institutes of science and technology are expecting a budget cut of around 10%, which has also raised concern among graduate students, professors, student unions at major universities across South Korea. Unfortunately, Liberia National Budget and Economic Classification 2022 – 2025 www.mfdp.gov.lr has no allotment for R&D, which is one of the reasons the country still suffer from resource curse. To overcome this, national government should create or support existing institutions through the budget to get researchers to work to identify our capability and innovative means to transform our natural resources in to value addition.
In conclusion, let the national government prioritize investing in technical and technological education for youth empowerment, invest in infrastructural development such as energy, roads, water supply, promote innovation such as R&D institutions, Laboratories, Universities, firms and research hubs etc. The legislature should formulate strong domestic policy and periodically review it to ensure concession companies engage in exploiting our natural resources go through transformation and value addition before exportation on international market in order to expand the economy. Potentially, a country with largely agricultural economy, stands to gain greatly from the adoption of artificial intelligence (AI) in agriculture. AI has the potential to boost agriculture productivity and efficiency in Liberia by strengthening supply chains, increasing yields and maximizing resource allocation. This will allow around 70% of Liberia ‘s workforce works in the agriculture industry, which account for about 38% of the nation’s GDP (World Bank, 2021). Despite this, agricultural output is still low as a result of issues like poor infrastructure, lack of access to modern farming methods and finance, and the consequences of climate change (FAO, 2020). Utilizing AI – driven technologies will help Liberia overcome these obstacles and expand it agriculture industry. This is possible through international engagement and cooperation. South Korea is unique location for such engagement and cooperation in providing the necessary AI technologies and technical support for such opportunity. Interestingly, the diplomatic mission in Liberia is willing to cooperate with the government of Liberia to ensure this happen to boost the agricultural sector and also a unique sector for Liberia capability in the sub region and ECOWAS countries.
References:
- Eric Werker and Lant Pritchet, 2014, 2 deals and development – in resource – dependent fragile state: the political economy of growth in Liberia 1960
- Veerayooth Kanchoocha et al. The middle – Income Trap East Asian Miracle Lessons
- Jan Fagerberg et al. Innovation and Economic Development
- Sanjaya Lall , Technological change and industrialization in the Asian Newly Industrializing Economics: Achievement and Challenges
- Joint Monitoring Program (JMP, 2017) and Power Africa fact sheet, 2020
- Steven Radelet , Reviving Economic Growth of Liberia, 2007
- www. Worldatlas.com
- www.mfdp.gov.lr Ministry of Finance and Development Planning
- Digital Economic Diagnostic, Liberia, World Bank group, 2021