Lebanon

Economic Freedom Score

25

World Rank:

91

Regional Rank:

10

Least
free 0

economic freedom score is 59.5, making its econoLbyebanons

my the 91st freest in the 2013 Index. Its score has decreased
0.6 point since last year, primarily due to declines in prop-

50

75
Most

100 free

59.5

Freedom Trend
62

erty rights, business freedom, and labor freedom. Lebanon is

ranked 10th out of 15 countries in the Middle East/North Africa region, and its overall score is just below the world average.

61

The Lebanese economy has registered fragile progress toward

greater economic freedom over the past five years. Regulatory
inefficiency, exacerbated by political volatility, curbs privatesector development. Despite some improvement in streamlining business formation, government bureaucracy and the lack
of transparency create a poor entrepreneurial climate.
Implementation of deeper institutional reforms to improve
the foundations of economic freedom is critical to Lebanons
prospects for long-term economic development and greater
poverty reduction. Systemic weaknesses persist in the protection of property rights and effective enforcement of anticorruption measures. The judiciary remains vulnerable to
political influence.
Background: Lebanons economy has been severely disrupted since 1975 by civil war and Syrian occupation. Syria
was forced to withdraw its army in 2005 after its government
was implicated in the assassination of former Lebanese Prime
Minister Rafiq Hariri. In 2006, Lebanon-based Hezbollah
forces instigated a conflict with Israel. Other factions supported by Syria and Iran also tried to destabilize the government.
Hariris son, Saad Hariri, was elected prime minister in June
2009 and in November was forced by Syria to form a national
unity government that included Hezbollah. That government
collapsed in January 2011 when Hezbollah withdrew and engineered the elevation of Najib Mikati as prime minister. Lebanons economy was virtually destroyed by 15 years of war and
occupation. Political uncertainty at home and popular unrest
in neighboring Syria have slowed recovery significantly.

How Do We Measure Economic Freedom?

See page 477 for an explanation of the methodology

or visit the Index Web site at heritage.org/index.

60
59
58
57

2009

2010

2011

2012

2013

Country Comparisons
Country

59.5

World
Average

59.6

Regional
Average

61.8

Free
Economies

84.5
0

20

40

60

80

100

Quick Facts
Population: 4.0 million
GDP (PPP): $61.4 billion
1.5% growth in 2011
5-year compound annual growth 6.7%
$15,523 per capita
Unemployment: n/a
Inflation (CPI): 5.0%
FDI Inflow: $3.2 billion
Public Debt: 136.2% of GDP
2011 data unless otherwise noted.
Data compiled as of September 2012.

285

LEBANON (continued)
THE TEN ECONOMIC FREEDOMS
Country

RULE OF LAW

World Average

Rank

Property Rights 20.0

Freedom from Corruption 25.0

141st
131st
0

20

40

60

80

100

The judiciary is weak and vulnerable to political interference. The government-appointed

prosecuting magistrate exerts considerable influence on judges. Trials, particularly of commercial cases, drag on for years. Lebanese law provides for some protection of intellectual property
rights, but piracy remains a significant problem. Rampant corruption is aggravated by sectarian
ruptures that are exacerbated by conflict in neighboring Syria.

LIMITED
GOVERNMENT

Fiscal Freedom 90.8

Government Spending 74.6

27th
66th
0

20

40

60

80

100

The top income tax rate is 20 percent, and the top corporate tax rate is 15 percent. Other taxes
include a value-added tax (VAT) and an inheritance tax. The overall tax burden is equivalent
to 17.2 percent of total domestic income. Government spending accounts for 29.1 percent of
total domestic output. The deficit equals 5.6 percent of GDP, and public debt exceeds the size
of the economy.

REGULATORY
EFFICIENCY

Business Freedom 50.3

Labor Freedom 57.2
Monetary Freedom 76.5

142nd
102nd
75th
0

20

40

60

80

100

The entrepreneurial framework lacks transparency and efficiency. Completing licensing

requirements takes more than 200 days and costs over three times the level of average annual
income. Bankruptcy procedures remain burdensome and costly. The rigid labor market is stagnant. The government influences prices through state-owned enterprises and directly controls
the prices of key products. Monetary stability is weak.

OPEN
MARKETS

Trade Freedom 80.4

Investment Freedom 60.0
Financial Freedom 60.0

67th
72nd
40th
0

20

40

60

80

100

The trade-weighted average tariff rate is 4.8 percent. The trade system is relatively open, and
efforts to join the World Trade Organization are progressing. Political instability and the arbitrary and non-transparent interpretation of laws continue to impede foreign investment. The
financial sector is relatively well developed for the region. The state retains no ownership in
any commercial banks.

Score Changes
LIMITED
GOVERNMENT

RULE OF LAW
Property Rights
Freedom from
Corruption
286

5.0
0

Fiscal Freedom
Government
Spending

0
+6.4

REGULATORY
EFFICIENCY
Business Freedom
Labor Freedom
Monetary Freedom

2013 Index of Economic Freedom

OPEN MARKETS
3.6
3.4
0.4

Trade Freedom
Investment Freedom
Financial Freedom

0
0
0