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Liberia
remains uncompetitive in a highly competitive
world
Wednesday,
July 07, 2007
By
Rufus N. Darkortey
Take a look
around your living room. The television and
computer sitting on the shelf were
manufactured in a country other than
Liberia
. Walk over to your closet, the coat suit
hanging there was manufactured by a country
other than Liberia.
Look at the Volkswagen, Mercedes Benz,
Chevy Blazer, Nissan and
Toyota
pick-up trucks commuting the streets, they
were manufactured in countries other than Liberia.
Watch an NBA, NFL, Tennis, Soccer, or boxing game, the players and executives that
participate in these sporting events are
barely Liberians. Turn on an African or
other type of movies; you will either be
watching a Nigerian movie or movies from
countries other than
Liberia
. Finally, tune in to world political and
economic events, the major players are of
countries other than Liberia.
Some readers
will find every mean to disagree with me or
defeat my argument on grounds that Liberia
or Liberians have been competitive in some
areas. For example, George Weah,
former World, Europe, and Africa footballer
of the year; Angie Brooks-Randolph, former
President of General Assembly of the United
Nations; Refugee Boy, a movie by a Liberian,
etc.
While these
counter arguments are valid, they can be
invalidated by the inconsistencies and
insignificance at which these historical
events occur.
Liberia’s competitiveness in the world is
statistically or physically observed to be
very negligible. For example, among other
countries, Liberia’s economy ranks at the bottom; her
quality of movies, music, and other forms of
entertainment rank least; her political
power is very insignificant to others; and
her manufacturing sector is almost
non-existent.
The
Big Question:
A question that
comes to mind is that – is Liberia
uncompetitive by nature or by design?
Putting the question another way – did God
design Liberia to be a poor, weak,
insignificant, or uncompetitive; or
Liberia’s poverty, weakness,
uncompetitiveness, or insignificance is a
design organized and implemented by
Liberians, her governments, or her key
decision makers?
Based on casual
observation and analysis, I can reasonably
conclude that
Liberia
is uncompetitive by design and not by
nature. Answering the first question will
help to support and explain my conclusion. Liberia
is naturally blessed with natural resources
(e.g., iron ore, timber, diamond, gold,
etc.), and fertile soil that can adequately
support the massive production of rice,
orange, banana, etc for domestic and
international consumption. The marketability
and significant economic values of these
natural resources are highly sufficient to
create wealth for domestic investors; create
high quality jobs; strengthen the economy;
and give
Liberia
a competitive power in the world. Therefore,
Liberia
lack of competitiveness is not by design of
nature.
Liberia
is poor, weak, insignificant, and
uncompetitive by her own design:
Liberia
still remains poor, weak, insignificant, and
uncompetitive by her own design. However,
before justifying my claim, let me compare
and contrast
Liberia
and
Singapore
, a South Asian country. Unlike Liberia (3.2
million people) with
abundant natural resources, the only natural
resources Singapore, a country of 4.6
million people, has is fish and deepwater
ports. However, according to the 2006 CIA
World Fact book estimated statistics, the
gross domestic product (GDP) (Purchasing
Power Parity) of
Singapore
is US$141.2 billions, while
Liberia
’s GDP is US$2.8 billion. Her unemployment
rate is 3.1 percent, while
Liberia
’s unemployment rate is 85 percent. And
her GDP Per Capita is US$31,400.00, while
Liberia
’s GDP Per Capita is US$900.00. The
finding of these comparisons suggests that Liberia’s
uncompetiveness is driven by self-designed
behaviors, policies, and practices that are
counterproductive to the competitive growth
and development of the country.
A brief analysis
of the following factors will help us
understand how
Liberia
is uncompetitive by design.
Poverty
or the lack of income: Poverty is very
detrimental to a society because it affects
the social, economic, and political
well-being of every citizen of a country.
Every economy depends on buying and selling
of goods and services. However, in order to
buy or sell any product, you must have the
money to do so. A poor individual does not
have the capacity to buy a flat screen TV,
an automobile, or a computer. As a result,
no supplier will be willing and able to sell
these items in
Liberia
where 80 percent of the people live on just
US$2.50 per day. Therefore, the wealthy
Liberians who are potential suppliers of
such economic items will not be able to do
so. Consequently, their wealth will lack the
potential to be fully reinvested unless it
is deployed in other wealthy countries. The
wealth that lacks the potential to be
reinvested elsewhere or maintained will be
unexpectedly depleted. As a result, the
wealthy individual may be forced to explore
corrupt means to replenish his wealth – a
situation that leads to corruption and
illegal activities in a country like
Liberia
.
The government
also lose substantial amount of tax revenue
per year due to poverty. Because poor
individuals don’t have the capacity to
succeed in a market economy, they resort to
barter systems where they are forced to beg
or exchange goods and services with other
poor individuals. As a result, the
government of countries like
Liberia
will lose millions of U S dollars in sales
and other pertinent taxes due to the high
poverty rate of 80 percent. Consequently, to
provide the basic social services like roads
and hospitals, the government will have to
beg other countries to the unfavorable terms
and conditions of those countries, a career
Liberia
has chosen to do very well.
The
dissatisfaction of the poor individuals to
continuously live under such humiliating
circumstances, while the elitist class
enjoys the wealth of the country can
potentially force the poverty stricken
individuals to seek desperate or
catastrophic remedy, which are very
detrimental to an entire society. The very
high level of corruption and the civil war
of
Liberia
are dramatic examples of such catastrophic
remedies.
The
lack of capital to domestic investors:
The
average saving rate in
Liberia
is practically zero, since the average
Liberian lives on just US$2.50 per day. The
banking sector is not in the position to
make loans to the 80 percent of Liberians
that are poor because they lack the income
and properties to pledge as collateral for a
loan. Besides, unlike the
USA
where consumers and borrowers are traceable
by a social security number and a well
organized postal system, it is highly
difficult to trace any borrower in Liberia. Additionally, unlike developed countries
that provide start-up capital to small
business owners through small business
administrations, Liberian governments, for
the past 200 years, have consistently failed
to capacitate domestic investors.
Moreover, the
private sector development policy of
successive Liberian governments is to
completely rely on foreign investors to
provide the jobs. Unfortunately, the
government has not understood that foreign
direct investment (FDI) in
Liberia
is a necessary but not sufficient condition
to build a strong private sector that
provides quality jobs that pay competitive
wages. A key economic concept suggests that
capital flows to where it receives the
highest return, thus foreign capitals that
have been deployed in a weak country like
Liberia
has accumulated huge economic rent (profit).
Although this
claim cannot be statistically justified due
to the difficulties in acquiring such data
in least developed countries like
Liberia
, the empirical evidence based on physical
observation is profound. For
example,
Liberia
has had long standing foreign investment
relationship with Lebanese investors.
However, such investment in
Liberia
has not provided quality jobs that pay
competitive wages that can lift a typical
Liberian out of poverty. It has been
observed that each Lebanese store employs,
on the average, 2 Liberian workers. One of
these workers is responsible to wash dishes
and perform other household duties, while
the remaining worker does the heavy lifting
in the store. These workers usually get paid
salaries that are very inadequate to lift
them out of poverty. Unlike, the
unattractive wages that are paid to the
Liberian workers, the Lebanese investors are
observed to be accruing huge profits as
demonstrated by their high standard of
living, which are exemplified by the quality
of their homes, cars, or the quality of
schools their children attend.
The
lack of significant social infrastructure development:
National development
policies of
Liberia
and many African countries have always
depended on the platform of a sitting
government, which unilaterally decides the
kind of development that must occur in the
country, where, when, and how such
development should be implemented. Because
such policies are biased against groups and
regions that are not favorable to the
sitting president, most parts of Liberia has
not experienced any form of development
since the establishment of Liberia about 200
years ago. Additionally, such policies
severely lack continuity, consistency,
organization, congruity, and the rapidity at
which they can develop the country because
these policies are largely vulnerable to
exploitation and manipulation by the sitting
administration to the disadvantage of the
entire country.
I have commenced
discussions with members of the legislature
to pass such a proposal into law for the
common good of our country. Please join me
in this endeavor by encouraging your
legislator to vote for this brilliant
proposal.
The
lack of competitive political parties or too
many political parties:
The one party
system of the True Whig Party monopolized
and dispensed political power to the
detriment of the growth and development of
Liberia
The development of the country was
one-sided with the development of the
indigenous been neglected by the Americo-Liberia
ruling class, which is typical in most
countries. Fortunately, this system was
dismantled and replaced by another
unproductive political system that gave rise
to political pluralism. As a result, every
Tom,
Mary,
Dick, and
Harry
is claiming to be president without the
requisite credentials to do so. The new
multi-party system has given rise to the
establishment of make shift, uncompetitive,
and unproductive political parties. Because
these parties severely lack the ability to
compete with or constructively oppose the
ruling party,
Liberia
is suffering from some form of political
paralysis, where the ruling party completely
dominates the rest of the political parties,
thus practically giving rise to a one party system.
Liberia
can only improve democratically if all the
inefficient political parties are combined
into two political parties. The benefit of a
two-party state is that it creates a competitive
political environment that promotes growth,
development, and unity. The design of such
system is above the capacity of this
article, but I hope we can start to think
about it.
These factors
plus many others I intend to develop in
the near future are key variables that are
making Liberia
uncompetitive by design. I hope by reading
this article, you are inspired to make Liberia
competitive by mitigating the uncompetitive
factors.
Rufus
N. Darkortey, an economist, works for a major
bank in Cleveland, Ohio. He can be contacted at
darkort@aol.com
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