Government spending, taxation, and the size of government-controlled enterprises in Lebanon are large enough to have a measurable impact on the country’s economic freedom rankings, according to the latest Economic Freedom Audit conducted by Canada’s Fraser Institute in partnership with the Lebanese Institute for Market Studies (LIMS) and Atlas Network.
Lebanon ranks 75th out of 162 nations in the Fraser Institute’s Economic Freedom of the World: 2019 Annual Report, which analyzes the policies and institutions of each country to measure the ability of individuals to make their own economic decisions. The November audit, held in the port city of Tripoli as political turmoil was unfolding throughout the country, was the latest in a joint project between the Fraser Institute and Atlas Network that is designed to develop practical policy reform ideas for local audiences.
"Improving the Economic Freedom of the People of Lebanon"—Chamber of Commerce, Industry, and Agriculture—Tripoli, Lebanon. Seated left to right: A local translator; Dr. Patrick Mardini, President and Founder of the Lebanese Institute for Market Studies; Fred McMahon, Resident Fellow and Dr. Michael A. Walker Chair at the Fraser Institute; Toufic Dabboussi, President of the Chamber of Commerce, Industry, and Agriculture; Dr. Mike Walker, Founder and Former Executive Director of the Fraser Institute; and Erik Eppig, Institute Relations Manager at Atlas Network .
As a result of years of government waste, overregulation of business and trade, and limitations to the rule of law, Lebanon is on the brink of a Greek-style economic collapse, and the economic environment remains volatile, with protests erupting around the country and few immediate remedies available. "Lebanon is struggling economically, but people in power are portraying it as a political conflict when the solution is purely economic,” said Kristelle Mardini, Director of LIMS. Mardini believes that liberating the economy from the government is the answer to the country’s current problems.
LIMS employed a three-pronged approach to the audit process: engaging protesters in a public conversation to educate them about the importance of economic freedom; conducting a series of local media interviews and sharing via social media networks; and presenting a detailed overview of the Fraser report to a select group of policymakers, business leaders, and activists. Through this approach, LIMS has effectively positioned itself to be a credible voice for policy reform as it relates to economic freedom in Lebanon.
Economic freedom in Lebanon has steadily declined since Fraser’s initial index in 2010. While Lebanon remains slightly above the world average and above the sharply-declining Arab country average (including Algeria, Bahrain, Egypt, and Iraq), it remains well below the likes of the selected post-Soviet state average (including Lithuania, Latvia, Georgia, and Estonia). While ranked middle-of-the-pack in terms of overall economic freedom, Lebanon lags dramatically in most indicators, including the Rule of Law (ranked 134th), Gender Disparity (ranked 132nd), Free Trade (104th), Regulation (130th), and Business Regulation (151st) indicators.
LIMS was recently recognized as a finalist for the 2019 Templeton Freedom Award for their campaign to open up the Lebanese electricity sector to private competition. By working to break up a government monopoly on electricity production, which has proven to be both expensive and inefficient for consumers, LIMS has laid the foundation for other sectors to follow suit. LIMS’ suite of private-sector reforms stands the best chance as a long-term remedy to the country’s massive national debt and government waste.
LIMS’s Economic Freedom Forum is part of Atlas Network’s ongoing Economic Freedom Audit series, which is designed to help local partners best convey the advantages of free markets. Each audit uses data and local knowledge to craft recommendations for policy changes that will help improve the country’s ranking in the Fraser Institute’s annual Economic Freedom of the World Index. Audits have been undertaken in Argentina, Bosnia, Brazil, Côte d’Ivoire, Egypt, Ghana, Greece, Jordan, Kyrgyzstan, Lebanon, Malaysia, Morocco, Namibia, Nepal, Oman, Panama, Serbia, Sri Lanka, Tunisia, Turkey, Ukraine, Uruguay, and Venezuela.
LIMS received an Atlas Network grant to conduct an Economic Freedom Audit in partnership with the Fraser Institute.