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Economic Planning

In conformity with the principles and philosophy of a free enterprise system enunciated in the Open Door Policy, development planning in Liberia has bean restricted to public sector in vestment programs. Over time these programs have grown in importance and have become the major element in the expansion of Liberian commercial agriculture in the non enclave economy, the development of the traditional sector, and the growth of the country's physical and social infrastructure. But there has been continuing reliance on private investment and individual initiative as the major instrument for broad economic advancement. In general, the government's attitude toward planning from President William Vacanarat Shadrach Tubman to Doe was expressed by the former in the introduction of an early plan:

We are not proposing a plan that calls for a fully planned economy or over-centralized economic decision making. Rather, we are proposing a plan that, on the one hand, will present in some detail the development allocations in the public sector designed to assure that the resources channel led through the budget make the greatest contribution possible to achieving our national goals and, on the other hand, defines policies with respect to the private sector designed to be most conducive to the maximum contribution by the private sector, domestic and foreign, to the rapid growth of a healthy national economy.

Participation in development by the private sector has been encouraged by various incentives and by the implementation of specific policies, e.g., farm pricing. But the government has generally refrained from setting quantitative targets in the belief that other elements besides government policy also were involved in the nature and timing of private investor decisions..

The first government plan was announced by Tubman shortly after the end of World War II. Early planning procedures were elementary, however, and the subsequent development of trained staff, institutions, and data bases took place only very gradually; 30 years elapsed before the first fully comprehensive The economy plan appeared in 1976. In 1962 the National Planning Council, an overview body, and the Office of National Planning were established; in 1966 the latter office became the Department of Planning and Economic Affairs and later a ministry. Government development continued to be carried out on a project by project basis, however, and the larger undertakings were handled by the foreign donors, notably the United States, which furnished grant aid as well as substantial loan capital through the United States Export Import Bank (Eximbank), later supplemented by large amounts of development aid from West Germany.

Much of the rapid growth in GDP recorded in the 1950s and 1960s had been accounted for by the enclave sector; insofar as this had an impact on the rest of the economy, it had largely been confined to the modern sector, leaving the traditional economy only marginally affected. The income gap between it and the modern sector had progressively widened; in 1970 per capita income was estimated at about $273 but that of the agricultural subsistence population at $50 or less. Government promoted economic development had centered on the formulation and implementation of isolated projects without relating them to the achievement of sustained economic growth. Although basic infrastructure had been expanded, this increase again had not been linked to a broad development strategy to benefit all segments of society. This approach was corrected in the National Socio-Economic Development Plan, July 1976 June 1980, which set out a highly ambitious public sector investment program totaling $415 million over the period. A supplemental amount of $85 million was used largely for projects associated with the 1979 OAU summit conference.

A cornerstone of the new effort was integrated rural development projects in the traditional sector. One such scheme had been undertaken before work outlined in the plan started in Lofa County. It was continued, and additional projects were started in Bong and Nimba counties (see Traditional Agriculture, this ch.). By the end of the plan's third year, about 31 percent of the budget had been spent in rural areas and 63 percent for urban projects. Much of the difference in the rural and urban amounts was owing to large expenditures for roads, public utilities, communications, and construction projects in the Monrovia area.

The second socioeconomic development plan, delayed a year after the military coup, covered the period July 1981 June 1985. An optimistic 3.3 percent real annual growth rate in GDP was projected. Total expenditures called for over the four year period amounted to $749 million, including net resources from new external loans of almost $192 million; substantial grant aid was also anticipated in estimating current government savings available to finance the plan. However, more than three quarters of total investment was to continue implementation of uncompleted projects from the first plan.

The deterioration of the economy in the early 1980s, evidenced by the negative growth of GDP for four consecutive years (1980 83), adversely affected government budgetary resources for the second plan to the point that available external loan amounts could not be fully utilized because of shortages in domestic counterpart fiends. It became obvious that the plan could not be completed as laid out in the original time frame, and it was extended in 1983 to six years, ending on June 30, 1987. In 1983 estimated per capita personal consumption in real terms was about 20 percent lower than the 1974 level. The desired growth in the extended plan period, if achieved, would still raise total GDP in 1987 to a level only slightly higher than that achieved in 1978.

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