Lebanon

The following entry is the one originally submitted by the contributors. The previous version of this entry that appeared in the original printing of the encyclopedia was not the one submitted by the contributors and was mistakenly used by the Publisher. The entry was written by Drs. Efthimios Poulis and Konstantinos Poulis, and the Publisher apologizes for submitting the wrong version of this entry for publication.

Lebanon has a liberal economy with free transfer of capital and goods. It is a small (Gross Domestic Product (GDP) is estimated at $24.6 billion in 2007) and service-based economy where services account for approximately 71 percent of GDP. The main economic sectors are financial services, tourism, commerce, manufacturing, and agriculture. In particular, agriculture is the main source of employment in rural areas, but it is relatively underdeveloped with inefficient production techniques. As a result, the sector represents only a small portion of the GDP. Main agricultural products include vegetables, potatoes, tobacco, and fruits.

The majority of Lebanese industrial firms are small and family-owned entities, which are concentrated in the capital city of Beirut. Food and beverages is the main industrial sub-sector with the highest workforce and number of firms. Other industrial sectors are furniture, textiles, clothing, leather, wood products, and metal goods. Although the industrial sector has significantly recovered since the civil war (1975–90) and regained some of its regional competitiveness, it was badly hit during summer 2006, when a conflict with Israeli forces resulted to the destruction of many factories including dairy, steel, and glass facilities.

As a result of civil war, Lebanon suffered major physical and infrastructural damage. This led to a boost in the construction sector in the postwar era. One of the major development projects toward the rejuvenating era was the redevelopment of downtown Beirut. The massive reconstruction program was funded by substantial amounts of external and internal funds, which led to the accumulation of a huge debt. This debt still represents a major drain on public resources. In an effort to reduce the burden of public debt, successive governments sought support from existing creditors and the country's foreign allies. Nevertheless, despite these efforts from the Lebanese government, public debt represents a long-term problem.

Lebanon was regarded as the regional financial hub during the 1960s and early 1970s due to its developed banking sector and, particularly, banking secrecy law. However, the sector suffered a slowdown during the civil war with capital moving outside the country. The sector recovered in the postwar period, with 131 commercial banks operating in the country under license from the central bank (Banque du Liban). These banks are supervised and regulated by the Banking Control Commission. Commercial banks are the main creditors to the Lebanese government, buying high-yield treasury bills and Eurobonds to fund the government reconstruction plan, which make them highly exposed to public debt. Lebanese commercial banks expand regionally toward the Middle East and North Africa. Many investment houses and brokerages were established during 1990 offering investment opportunities to wealthy individuals, but they had limited success. The Beirut Stock Exchange, which closed in 1975 due to the outbreak of the civil war, reopened in 1995 and trading started in January 1996. The liquidity is low and only six banks are among the 11 listed companies. Despite the efforts to regain Beirut's role as a financial center in the region, the process has had limited success due to the growth of many financial centers in the region such as Bahrain and Dubai.

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