The political economy of currency depreciation in Lebanon 1989-2022

Abstract

Exchange rates are one of the most important aspects of the economic health in a country. This study examines how the political history of Lebanon and its geo-political connection to the region's turbulence, have played a major role in its current severe currency crisis. One of the study’s aims is also, to find out the reasons behind the current Lebanese political and economic crisis. The scope of this research is limited to the period 1989-2022. Using an International Political Economy IPE approach, Laissez-Faire Economy (Free Market Capitalism), and State Capture theories, the study explores the respective economic systems around the world and how the political economy and economic system of a country affect its currency depreciation. Through context analysis of semi-structured interviews with experts and qualitative secondary analysis of data collected from primary sources, the study therefore, analyses the Lebanese political and economic factors and how Lebanon’s currency depreciation reflected the country’s political and economic performance. Finally, this study suggests the political path Lebanon should take in order to stabilize its currency and create economic growth.