An Empirical Assessment of the Impact of Trade Balance, Foreign Direct Investment (FDI), And Public Debt on Economic Growth in Liberia (2008–2023)

An Empirical Assessment of the Impact of Trade Balance, Foreign Direct Investment (FDI), And Public Debt on Economic Growth in Liberia (2008–2023)

¹Emmanuel Saye., ²Martins Onyekwelu Onuorah

¹Department of Economics, Kigali Independent University ULK, Kigali, Rwanda

²School of Postgraduate Studies, Kigali Independent University ULK, Kigali, Rwanda

DOI: https://dx.doi.org/10.47772/IJRISS.2025.909000281

Received: 02 September 2025; Accepted: 08 September 2025; Published: 08 October 2025

ABSTRACT

This study examines the impact of trade balance, foreign direct investment (FDI), and public debt on economic growth in Liberia from 2008 to 2023, a period marked by post-conflict recovery, external shocks, and the COVID-19 pandemic. Employing a Vector Error Correction Model (VECM) using time-series data from the Central Bank of Liberia, the analysis uncovers both short-run and long-run effects. The results show that FDI significantly increases short-run GDP growth, with a 1% increase contributing to a 0.922% rise (p = 0.002), but negatively affects growth in the long run (coefficient = -0.709, p < 0.01). Public debt consistently suppresses GDP, both in the short run (−0.153%, p = 0.016) and long run (−0.435, p < 0.01), reflecting fiscal vulnerabilities. Trade balance, despite persistent deficits, has no significant effect in either the short or long run. These findings highlight the transient benefits of FDI, the detrimental effects of mounting debt, and the complex neutrality of trade imbalance. The study advocates for fiscal discipline, structural reforms, improved FDI governance, and export diversification to secure sustainable growth. Its implications offer empirical insights tailored to Liberia’s policy context and broader lessons for small, open, post-conflict economies.

Keywords: Liberia, economic growth, foreign direct investment, public debt, trade balance, VECM

INTRODUCTION

Liberia’s economic trajectory from 2008 to 2023, shaped by post-conflict recovery, global economic shocks, and the COVID-19 pandemic, has been profoundly influenced by trade balance, foreign direct investment (FDI), and public debt. These macroeconomic variables are critical in determining the economic stability and growth prospects of small, resource-rich economies like Liberia. The trade balance, reflecting the difference between exports and imports, has been persistently negative due to heavy reliance on imported machinery, petroleum, and food staples like rice, outpacing export revenues from commodities such as rubber and iron ore (World Bank, 2024; Dukuly & Huang, 2020). This trade deficit exerts pressure on foreign exchange reserves, contributing to currency depreciation and macroeconomic instability (OECD, 2020). FDI, a vital driver of economic growth, has been significant in Liberia’s mining sector, with inflows rising from $603.3 million in 2021 to $948.3 million in 2022, reflecting investor confidence in natural resources (World Bank, 2022). However, its focus on extractive industries limits economic diversification, and benefits are constrained by governance issues and infrastructure deficits (Jensen, 2017; Stern & Ramkolowan, 2021). Public debt, meanwhile, has surged due to infrastructure financing and fiscal deficits, reaching 58.8% of GDP by 2023, undermining fiscal space and long-term growth (IMF, 2024; World Bank, 2021). Despite debt relief under the HIPC Initiative in 2010, borrowing resumed to address crises like the Ebola outbreak (2014–2015) and the COVID-19 pandemic, exacerbating fiscal vulnerabilities (IMF, 2015; World Bank, 2019).

Liberia’s public debt trends from 2008 to 2023 reflect a complex interplay of domestic and external factors. Post-conflict reconstruction necessitated large-scale borrowing for infrastructure, but low domestic revenue mobilization and external shocks, such as the 2008–2009 global financial crisis and the Ebola epidemic, drove debt accumulation (World Bank, 2016; IMF, 2015). By 2023, high debt servicing costs strained budgets, diverting resources from critical sectors like health and education, with the debt-to-GDP ratio signaling sustainability risks (IMF, 2023; African Development Bank, 2022). Trade imbalances, characterized by a 26.4% GDP deficit in 2023, stem from structural weaknesses, including limited industrial capacity and export concentration in volatile commodities (World Bank, 2024; Stern & Ramkolowan, 2021). FDI, while boosting infrastructure and employment, has been volatile due to global economic conditions and governance challenges, failing to foster broad-based development (Jensen, 2020; UNCTAD, 2021). These factors collectively challenge Liberia’s macroeconomic stability, increasing inflation, exchange rate volatility, and dependence on external financing (IMF, 2019; World Bank, 2020).

The problem statement is stark: Liberia’s economic growth is severely constrained by persistent trade deficits, volatile FDI inflows concentrated in extractive sectors, and an escalating public debt burden, which reached 58.8% of GDP in 2023 (IMF, 2024). These issues, compounded by governance inefficiencies and external shocks, create a vicious cycle of fiscal strain, currency depreciation, and limited economic diversification, threatening sustainable development (Dukuly & Huang, 2020; Stern & Ramkolowan, 2021). Without a clear understanding of how trade balance, FDI, and public debt interact to shape Liberia’s economic trajectory, policymakers lack the evidence needed to design effective interventions for resilient growth.

This study aims to evaluate the impact of trade balance, FDI, and public debt on Liberia’s economic growth from 2008 to 2023, addressing four specific objectives: investigating trade imbalances’ effects on economic stability and GDP growth, assessing FDI’s role in economic development, exploring public debt’s influence on growth amidst fiscal constraints, and determining their combined macroeconomic impact. The research is significant for providing evidence-based insights to guide policymakers in fostering export diversification, optimizing FDI benefits, and ensuring debt sustainability (World Bank, 2024; IMF, 2024). By focusing on Liberia, a resource-rich, post-conflict economy, the study offers tailored recommendations for sustainable growth, contributing to broader discourse on small open economies. The scope spans 2008 to 2023, capturing key economic shifts, including post-conflict recovery, global commodity price fluctuations, and the impacts of Ebola and COVID-19, using data from the Central Bank of Liberia to ensure reliability (World Bank, 2021).

The paper is layout in 4 sections. The first section in introduction where the detail overview about the current past and current state of the Liberia economy, the critical position of FDI ,public debt and trade balance , and the aim of the research. Section 2 presents the theoretical foundation of the research and the existing body of literature . The third part is the methodology used , the data source and the empirical model. Section 4 provides the analysis of the results from the regression models and finally the discussions.

LITERATURE  REVIEW

This literature review synthesizes existing research on the interplay between trade balance, foreign direct investment (FDI), public debt, and economic growth, with a focus on their relevance to Liberia’s economy from 2008 to 2023. The review covers conceptual definitions, theoretical frameworks, and empirical findings, highlighting gaps that this study addresses, particularly in the context of a resource-rich, post-conflict economy.

The trade balance, defined as the difference between a nation’s exports and imports, is a critical determinant of economic stability. A trade surplus enhances GDP growth by increasing foreign exchange reserves, while persistent deficits, as seen in Liberia, strain reserves and exacerbate macroeconomic instability (Krugman & Obstfeld, 2009; Blavasciunaite et al., 2020). In Sub-Saharan Africa, studies like Zahonogo (2017) and Saungweme & Odhiambo (2018) find that trade deficits, driven by reliance on primary commodity exports, increase vulnerability to global price shocks, limiting growth. For Liberia, Dukuly & Huang (2020) highlight how import dependency for essentials like rice and machinery, coupled with a narrow export base (rubber, iron ore), sustains trade deficits, leading to currency depreciation and inflation, which hinder economic progress (World Bank, 2024).

FDI is widely recognized as a catalyst for economic growth in developing countries by providing capital, technology, and jobs (Borensztein et al., 1998; Balashvili & Gattini, 2020). However, its impact depends on institutional quality and sectoral allocation. In Liberia, FDI has surged in extractive industries, with inflows rising from $603.3 million in 2021 to $948.3 million in 2022 (World Bank, 2022), but Jensen (2020) and Gill & Karakulah (2019) note its limited contribution to diversification due to focus on mining and palm oil. Adewumi (2006) and Dierk (2010) argue that economies with robust governance and human capital benefit more from FDI, a challenge for Liberia given its weak institutions and infrastructure (Ministry of Commerce and Industry, 2013; UNCTAD, 2021). These studies suggest FDI’s short-term growth effects may not translate to long-term development without structural reforms.

Public debt’s impact on growth is dual-edged, enabling infrastructure investment but risking fiscal sustainability when excessive. Reinhart & Rogoff (2010) and Law et al. (2021) demonstrate that high debt-to-GDP ratios, like Liberia’s 58.8% in 2023 (IMF, 2024), crowd out private investment and reduce growth. Krugman (1988) and Sachs (1989) introduce the debt overhang theory, suggesting that high debt discourages investment due to anticipated tax burdens, a concern for Liberia where debt servicing diverts resources from health and education (Ibrahim, 2020; World Bank, 2021). Tenny (2020) and IMF (2020) emphasize Liberia’s debt sustainability challenges, exacerbated by external shocks like the 2008–2009 financial crisis, Ebola (2014–2015), and COVID-19, which increased borrowing needs (African Development Bank, 2022).

Theoretically, the Solow-Swan Growth Model (Solow, 1956; Swan, 1956) posits that capital accumulation, including FDI, drives growth, but diminishing returns limit long-term impacts without technological progress, aligning with Liberia’s FDI challenges (Jensen, 2020). Endogenous Growth Theory (Romer, 1986; Lucas, 1988) emphasizes technology and human capital, underscoring the need for Liberia to enhance absorptive capacity to maximize FDI benefits (Benetrix et al., 2023). The Debt Overhang Theory (Krugman, 1988) explains how high debt levels deter investment, relevant to Liberia’s fiscal constraints (IMF, 2024). Empirically, cross-country studies by Barro (1991) and Levine & Renelt (1992) confirm trade openness and FDI as growth drivers, while excessive debt hampers it, though context-specific analyses for Liberia are scarce (Buryk et al., 2019).

Despite extensive research, gaps remain. Global studies often overlook Liberia’s unique post-conflict context, where trade deficits, FDI concentration in extractives, and rising debt interact uniquely (Gill & Karakulah, 2019). Existing literature lacks sectoral analyses of FDI’s impact on Liberia’s agriculture and manufacturing, and few studies explore sustainable debt thresholds or governance’s role in debt management (Ibrahim, 2020). This study addresses these gaps by empirically analyzing trade balance, FDI, and public debt’s combined effects on Liberia’s growth from 2008 to 2023, using time-series analysis to offer tailored policy insights for sustainable development.

METHODOLOGY

This study investigates the impact of trade balance, foreign direct investment (FDI), public debt, and economic growth in Liberia from 2008 to 2023 using a Vector Error Correction Model (VECM) to analyze short- and long-run relationships. The methodology leverages time-series data from the Central Bank of Liberia, processed through rigorous econometric techniques to ensure robust findings for the small sample of 16 annual observations.

Data Source

The study uses annual time-series data sourced exclusively from the Central Bank of Liberia’s Annual Reports (2008–2023), accessible at https://www.cbl.org.lr/publications/document-type/cbl-annual-reports. Data is extracted from annual reports, statistical bulletins, and balance of payments summaries, cross-referenced with public economic databases for consistency. Data cleaning addresses outliers, missing values, and inconsistencies using interpolation and imputation, with STATA software facilitating analysis.

Variables

The model includes GDP growth as the dependent variable and trade balance, FDI, and public debt as independent variables. Their definitions, measurements, and sources are presented below.

Unit Root Test

Stationarity is assessed using the Phillips-Perron (PP) test, chosen over the Augmented Dickey-Fuller (ADF) test due to its robustness in small samples, where ADF may exhibit bias. The PP test adjusts for serial correlation and heteroskedasticity non-parametrically, testing the null hypothesis of a unit root (non-stationary) against the alternative of stationarity (I(0)). Non-stationary variables are differenced or logarithmically transformed to achieve stationarity (I(1)), ensuring reliable regression results.

Cointegration Test

The Johansen Cointegration Test is employed to identify long-run equilibrium relationships among variables. The trace and maximum eigenvalue tests evaluate the null hypothesis of at most r cointegrating vectors against the alternative of more than r or r+1 vectors, respectively. Cointegration confirms the use of VECM, which models both short-run dynamics and long-run adjustments. Diagnostic tests, including Ljung-Box for autocorrelation, Breusch-Pagan for heteroskedasticity, and Variance Inflation Factor (VIF) for multicollinearity, ensure model validity.

Model Specification

3.6 Robustness and Diagnostic Checks (Added) To ensure the robustness of the VECM estimates, a series of diagnostic tests were conducted. Lag length was selected based on the Akaike Information Criterion (AIC) and Schwarz Bayesian Criterion (SBC) to balance model fit with parsimony. Stationarity was confirmed using the Phillips-Perron test, while cointegration among variables was verified with the Johansen test (trace and max-eigenvalue statistics). Post-estimation tests included the Ljung-Box test for serial correlation, the Breusch-Pagan test for heteroskedasticity, and the Variance Inflation Factor (VIF) to assess multicollinearity. The model stability was checked using eigenvalue modulus tests. These diagnostic checks confirm that the estimated VECM is statistically valid and robust for policy interpretation.

The VECM is specified to capture both short- and long-run dynamics among GDP growth, trade balance, FDI, and public debt, following the cointegration test results. The model is based on the framework used by Barro (1991) and Levine & Renelt (1992), adapted for time-series analysis. The short-run model is:

where ΔGDPt is the first difference of GDP growth at time t, α is the intercept, ΔGDPt-1 is the lagged first difference of GDP growth, ΔFDIt, ΔTRADEt, and ΔDEBTt are the first differences of FDI, trade balance, and public debt, respectively, and ϵt is the error term. Coefficients β1, γ1, δ1, and θ1 capture short-run effects. For the long-run relationship, the VECM includes an error correction term to adjust deviations from equilibrium, specified as:

where λ0 is the intercept, λ1, λ2, and λ3 represent long-run coefficients, and μt is the error term. The error correction term ensures variables revert to their long-run equilibrium. The model is estimated using STATA, with lag selection based on the Akaike Information Criterion (AIC). If autocorrelation or heteroskedasticity is detected, Newey-West standard errors or generalized method of moments (GMM) are applied to ensure robust coefficient estimates.

RESULTS

This section presents the findings from the time series analysis of the impact of trade balance, foreign direct investment (FDI), and public debt on the economic growth of Liberia over the period 2008 to 2023. The results are derived using appropriate time series econometric techniques, including Ordinary Least Squares (OLS) regression and the Error Correction Model (ECM), depending on the outcome of the stationarity and cointegration diagnostics. The model examines the influence of trade balance, FDI inflows, and public debt on real GDP growth. A total of 16 annual observations were used in the analysis. Findings are objectively reported through descriptive statistics, diagnostic tests (including ADF, Johansen, Ljung-Box, and Granger Causality), and regression outcomes, with data presented in clearly labeled tables to enhance clarity and interpretation.

Table 4.1.1 Descriptive Statistics[1]

Test for Stationarity

Table 4.2 Stationarity Test Results

Table 4.3 Cointegration Results[2]

VECM model Results

Since at least three of the variables are cointegrated (trace value=4.637 > %5 Critical Value = 3.76) as per the Johansen Cointegration test in table 4.3, the VECM model is chosen to model the short run and long run relationship between the variables.

Table 4.4. Short Run Vector error-correction model[3]

The VECM results provide insights into the short-run dynamics and long-run equilibrium relationships between Liberia’s economic growth (AGDP Growth), foreign direct investment (FDI), trade balance, and public debt over the period 2008–2023.

DISCUSSION

This paper investigated the impact of trade balance, foreign direct investment (FDI), and public debt on Liberia’s economic growth from 2008 to 2023 using an OLS regression model. The results reveal significant relationships between these macroeconomic indicators and GDP growth, with trade balance and public debt exhibiting negative effects, while FDI shows a positive influence. This section interprets these findings, compares them with existing literature, discusses their theoretical and practical implications, acknowledges limitations, and proposes directions for future research.

Trade Balance and Economic Growth

The trade balance’s insignificant results in the model mask deeper structural and institutional challenges. Despite persistent deficits, Liberia’s reliance on imports for fuel, machinery, and food staples reflects structural weaknesses in domestic production capacity rather than cyclical trade patterns. Institutional constraints such as weak customs administration, limited industrial policy, and governance bottlenecks may explain why the econometric results do not capture significant effects. These factors suggest that the insignificance of the trade balance variable is not due to its irrelevance but due to entrenched structural inefficiencies that distort its measurable impact on growth.

The trade balance demonstrates a negative and statistically significant effect on GDP growth (-0.327, p < 0.05), indicating that a 1% increase in trade deficit reduces economic growth by 0.327 percentage points. This supports the view that persistent trade deficits undermine economic stability by increasing dependency on foreign goods and contributing to currency depreciation. According to the absorption approach to trade balance theory, such deficits reflect excessive domestic spending over production capacity, thereby reducing national output growth.

This finding aligns with Olayungbo and Quadri (2019), who found negative trade balance effects in ECOWAS countries, and Adjei and Adom (2016), who attributed poor growth in Ghana to structural trade imbalances. Liberia’s narrow export base reliant on commodities like rubber and iron ore makes it vulnerable to external shocks, supporting the argument that trade deficits can severely constrain GDP performance in commodity-dependent economies. Conversely, Adegbite et al. (2020) observed positive trade balance effects in diversified economies, illustrating the importance of export base variety.

Foreign Direct Investment and Economic Growth

FDI shows a positive and statistically significant relationship with GDP in the short run (0.922, p = 0.002), but a negative effect in the long run (−0.709, p < 0.01). This divergence reflects Liberia’s heavy dependence on extractive-sector FDI (mainly mining and palm oil), which generates immediate output and employment but fails to sustain growth due to weak linkages with agriculture and manufacturing. A sectoral perspective suggests that while mining inflows provide short-term boosts, they have limited spillover effects. By contrast, potential FDI in agriculture and light manufacturing could enhance food security, stimulate value-added production, and foster long-term sustainability. Without such diversification, FDI’s transient growth effects will remain difficult to translate into sustained economic development.

FDI shows a positive and statistically significant relationship with GDP (0.415, p < 0.01), suggesting that a 1% increase in FDI inflows contributes to a 0.415 percentage point increase in economic growth. This result is consistent with the neoclassical growth theory, which posits that capital inflows supplement domestic investment, foster technology transfer, and boost productivity.

This supports findings by Asiedu (2002) and Osei and Gavu (2019), who reported positive FDI effects in sub-Saharan Africa, especially when institutional quality and macroeconomic stability are present. Liberia’s post-war recovery and investment incentives likely attracted FDI into mining, telecommunications, and infrastructure sectors, helping to drive growth. However, unlike Rwanda or Ghana, where FDI is often more diversified, Liberia’s reliance on extractives may limit the sustainability of these gains. Ndikumana and Verick (2008) caution that in the absence of strong linkages to local industries, FDI can have limited spillover benefits, which is a concern for Liberia’s economy.

Public Debt and Economic Growth

Public debt exhibits a negative and significant impact on economic growth (-0.290, p < 0.05), suggesting that each 1% rise in debt-to-GDP ratio reduces growth by 0.29 percentage points. This finding supports the debt overhang theory, which argues that excessive debt dampens investor confidence, crowds out private investment, and forces governments to divert resources toward debt servicing rather than development.

This aligns with Checherita-Westphal and Rother (2012) and Reinhart and Rogoff (2010), who found that beyond a certain threshold (60–90% of GDP), public debt starts to hurt economic performance. In Liberia, where public debt surged post-2014 due to infrastructure investments and post-Ebola recovery, rising debt servicing costs have constrained fiscal space. Conversely, Nketiah-Amponsah et al. (2021) observed a positive debt-growth relationship in Ghana during periods of productive investment, indicating that the impact of debt also depends on the quality of its use.

Implications of the Findings

The findings align with neoclassical growth theory for FDI’s short-term gains but highlight Liberia’s inability to sustain them due to weak institutions and sectoral concentration. Public debt’s adverse effects underscore fiscal vulnerabilities, while trade balance neutrality may reflect entrenched structural deficits.

Comparative analysis with Rwanda and Ghana reveals that FDI’s growth impact is stronger in diversified economies with robust governance. Liberia’s debt challenges mirror global thresholds (Reinhart & Rogoff, 2010), emphasizing the need for prudent fiscal management.

The significant negative effect of trade balance underscores the need for Liberia to diversify its export base and promote value addition in natural resource sectors. Policies aimed at strengthening manufacturing and agribusiness exports could help reduce the trade deficit and enhance foreign exchange earnings.

FDI: Positive short-run impact (0.922%, p = 0.002) but negative long-run effect (−0.709, p < 0.01), suggesting transient benefits. The positive FDI effect highlights the importance of maintaining macroeconomic stability and improving the business environment to attract and retain investment. Strengthening institutions, enhancing transparency, and expanding infrastructure could deepen FDI’s growth impact.

Public Debt: Consistently negative effects (−0.153% short-run, −0.435 long-run), aligning with debt overhang theory. The negative debt-growth relationship calls for prudent fiscal management, prioritization of concessional loans, and improved debt sustainability assessments. Strengthening domestic revenue mobilization and reducing reliance on external borrowing can help Liberia avoid a debt trap while preserving growth momentum.

These findings challenge the assumptions of the Ricardian equivalence and the Modigliani-Miller theorem, which propose that debt and capital inflows do not affect real outcomes. In Liberia’s context, institutional weaknesses and market imperfections render these propositions unrealistic, confirming that macroeconomic fundamentals and governance structures shape growth dynamics in low-income countries.

Study Limitations

This study is limited by its reliance on annual data, which may overlook short-term fluctuations or lags in policy effects. Additionally, the model does not account for exogenous shocks (e.g., commodity price fluctuations, global financial crises) or control variables such as inflation and political stability, which could influence growth.

Future research should explore these relationships using quarterly data and consider additional variables like exchange rates, institutional quality, and investment efficiency. A comparative study involving other ECOWAS countries would also enrich understanding of regional patterns and policy effectiveness.

POLICY RECOMMENDATIONS

1. Sectoral FDI Strategy: Redirect incentives to attract FDI into agriculture, agro-processing, and light manufacturing, while introducing local content requirements and reinvestment obligations in the mining sector to maximize domestic linkages.
2. Trade Balance Reform: Invest in export diversification strategies, strengthen customs systems to reduce leakages, and promote import-substitution industries such as rice production and cement manufacturing toreduce persistent deficits.
3. Debt Management: Limit non-concessional borrowing, prioritize loans for projects with clear economic returns, and adopt a transparent debt management framework with regular sustainability assessments.
4. Institutional Strengthening: Improve governance and regulatory quality to reduce leakages, corruption, and inefficiencies that undermine FDI benefits and trade competitiveness.

CONCLUSION

This study provides a comprehensive empirical assessment of the dynamic relationships between trade balance, foreign direct investment, public debt, and economic growth in Liberia from 2008 to 2023. The findings reveal a complex interplay among these macroeconomic variables, with distinct short-run and long-run effects that carry important policy implications. While FDI demonstrates a positive short-term impact on growth, its long-term negative effect suggests that Liberia has been unable to sustain the initial benefits, likely due to weak institutional frameworks and limited economic diversification. Similarly, public debt consistently suppresses growth across both time horizons, underscoring the country’s fiscal vulnerabilities and the urgent need for prudent debt management strategies. The trade balance, surprisingly, shows no statistically significant impact, indicating that Liberia’s chronic trade deficits may be offset by other financial inflows or that their negative effects are masked by structural economic weaknesses.

The transient benefits of FDI highlight a critical challenge for Liberia’s development trajectory. The initial growth boost from foreign investment, particularly in extractive industries, fails to translate into long-term gains, pointing to a lack of productive linkages between FDI and the broader economy. This aligns with existing literature on resource-dependent economies, where capital inflows often concentrate in enclave sectors with minimal spillover effects. To maximize FDI’s potential, Liberia must strengthen its institutional capacity, improve governance, and incentivize investments in value-added sectors beyond mining and raw material extraction. Additionally, policies that foster technology transfer and skills development could help bridge the gap between short-term capital injections and sustainable growth.

The persistent negative impact of public debt on economic growth reinforces the dangers of fiscal mismanagement in fragile economies. Liberia’s debt burden, exacerbated by crises like Ebola and COVID-19, has crowded out productive public spending and private investment, creating a vicious cycle of low growth and rising indebtedness. These findings support the debt overhang hypothesis, which warns that excessive borrowing can deter future investment and stifle economic activity. To break this cycle, Liberia should prioritize concessional financing, enhance domestic revenue mobilization, and implement rigorous debt sustainability frameworks. Strategic allocation of borrowed funds toward high-return infrastructure and human capital projects could also mitigate debt’s growth-inhibiting effects, provided such investments are paired with strong oversight mechanisms.

Ultimately, this study underscores the need for a balanced and integrated policy approach to address Liberia’s growth constraints. While FDI and debt management require immediate attention, the neutrality of trade balance should not be misinterpreted as a lack of concern it instead reflects deeper structural issues that demand long-term solutions, such as export diversification and industrial upgrading. The findings contribute to broader debates on post-conflict economic recovery, emphasizing the importance of institutional quality and policy coherence in fragile states. Future research could build on this work by incorporating additional variables like governance indicators or sector-specific FDI data, offering even finer-grained insights for Liberia’s development strategy. For now, the evidence calls for bold reforms to transform Liberia’s growth potential into tangible, inclusive progress.

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FOOTNOTE

[1] Data presented are as per the researcher analysis and generated using Stata 15.0

[2] Table 4.3 is generated using the Stata software version 15.0

[3] Table4.3 presented was generated using the Stata software version 15