The Liberian State of Emergency: What Do Civil War and State-Led Industrialization Have in Common?

What befalls the economy in countries that descend into violence? Using the case of Liberia, I argue that the effects of civil war on the private sector, while overwhelmingly disastrous, can, especially for infant firms that manage to survive, convey many of the benefits (and liabilities) that ISI and SLI policies have had elsewhere. Specifically, the war economy in Liberia mimicked import tariffs, localized the staffs of many companies, raised local content in products, and even spurred technical learning and knowledge accumulation. The intention in calling attention to ways in which the status quo of crisis benefited some companies is not to downplay the horror of the war years, nor to suggest that the war was in any way desirable. Rather, this paper aims (1) to dispel the discredited but persistent misimpression of the post-conflict economy as virtual tabula rasa, and (2) to emphasize the importance of protecting local industries in post-conflict economies.