Topher McDougal has an article in Peace Economics, Peace Science and Public Policy called “The Liberian state of emergency: What do civil war and state-led industricalization have in common?“
The main idea of the paper is fascinating: Liberia’s war mimicked some of the effects of state-led industrialization. Put differently, the war was disastrous for most firms, but it had some positive effects, especially for infant industries. McDougal gives lots of examples. Here are two:
- The elevated cost of importing goods from the Freeport during the war due to looting and war insurance mimicked import tariffs. This raised local content in products.
- The evacuation of foreigners localized staffs.
I take issue with two things McDougal said. First, he said he picked Liberia as a case study because the war lasted “long enough for businesses to consider the war environment as a status quo, rather than a brief, exceptional period.” Based on Lebanese business owners I have spoken to, this was not the case. During lulls in fighting, business owners often thought the war was over, and re-stocked their stores. One Lebanese supermarket owner told me he re-stocked almost his entire store 4 times between 1989 and 2003. This means that 3 or 4 times he thought the war had ended, only to have his store looted again.
Second, McDougal says the official unemployment rate in Liberia is 85%. I’m frustrated that this statistic is still floating around, as it’s simply not accurate. He cites a 2007 Ministry of Health report, but I can’t find the report online. My suspicion is that MOH people simply repeated the number everyone says over and over again.
But overall, a great paper. I definitely recommend it if you have any interest in Liberia’s private sector.
Update: Check out the comment from Joe. Here’s an excerpt:
…[McDougal] frames his argument as centering around infant firms, but it doesn’t appear that the firms in his study are “infant”, in that he chose firms that pre-dated and then survived the war, which implies that there might be something inherent about these firms and their managers for why they survived. I find this troubling for his knowledge accumulation argument: of course it would be more probable that locally embedded and established firms and their managers could adapt their supply chains in a conflict situation, but, in the Liberian context, I don’t think this equates with [import-substitution industrialization] policies of nurturing knowledge accumulation.
I agree that the paper is very fascinating–and an admirable exploration of a little discussed topic, the political economy of conflict–but I do take issue with a few of McDougal’s assumptions and claims.
First off, he frames his argument as centering around infant firms, but it doesn’t appear that the firms in his study are “infant”, in that he chose firms that pre-dated and then survived the war, which implies that there might be something inherent about these firms and their managers for why they survived. I find this troubling for his knowledge accumulation argument: of course it would be more probable that locally embedded and established firms and their managers could adapt their supply chains in a conflict situation, but, in the Liberian context, I don’t think this equates with ISI policies of nurturing knowledge accumulation.
Your anecdote about the Lebanese supermarket owner is spot on. I think a lot of political scientists make the low-intensity intra-state war argument without realizing that low intensity doesn’t imply low variance. I mean, as McDougal eloquently describes the civil war, “it was a constellation of sporadic violent eruptions, sometimes intensifying, sometimes subsiding.”
He also draws parallels with ISI in Latin America and East Asia, but these regions had very different goals in their ISI approaches. In any case, both regions focused on producing goods that were not on the normal/inferior margin (i.e. candles, local soft drinks), so I’m not sure if the Liberian case can directly compare.
However, I did like the part about it being medium-sized firms that were able to adapt to their situation. I think his analysis of their supply-chain flexibility is very relevant for other African cases (esp. with all those SME initiatives running about), so that definitely deserves some further investigation.
And 85% unemployment? Seriously?
As for the unemployment, i think that stat is crazy too. I’m pretty sure everyone quotes that stat from the CIA World Factbook – https://www.cia.gov/library/publications/the-world-factbook/geos/li.html
For one, that stat comes from 2003, arguably the worst part of the war.
Second, I think it only reflects a jobs as a reflection of steady employ with registered company. Does not take into account all the informal jobs – moto drivers, street vendors, marketers, car loaders, cleaners, etc – that make up the majority of income-finding here.
That’s my impression.