The current crisis of Lebanon: Is the Lebanese crisis a crisis of an emerging economy or a developing economy?

Abstract

Lebanon's severe economic crisis, rooted in post-civil war reconstruction funded by public borrowing, led to chronic deficits and massive public debt. The crisis is exacerbated by Lebanon's rentier economy, which relies heavily on external resources like remittances and international aid, and a fixed exchange rate policy that maintains social peace and living standards artificially. The government plays a central role in sustaining economic rents through debt and currency policies, benefiting a privileged few while underinvesting in productive sectors. Structural issues, such as an unbalanced trade deficit, underdeveloped industrial and agricultural sectors, and heavy reliance on the service sector, deepen socio-economic disparities. The review highlights the widespread poverty affecting vulnerable populations and the middle class's struggle, underscored by inadequate public services and increasing external dependencies. The thesis aims to uncover the systemic weaknesses and external influences that have contributed to the crisis, assess the sustainability of Lebanon's economic model, and provide insights into potential pathways for economic recovery and development.