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GTAP Resource #1944

"Evaluation Of Trade And Investment Policy Reforms In Cameroon"
by Bamou, Ernest

Our paper analyzes the links between liberalization of trade and investment policies and economic growth in Cameroon within 1980-2004. Two main trade policy reforms toward liberalization (989-1993 and 1994 to date) and three respectively more liberal investment policy reform are identified (1984, 1990 and 2002). During the period under study, other important related trade and investment reforms are implemented in the agricultural, industrial and services sectors in view to open them to competition. Thanks to the commitments of the UR and trade preferences granted to DCs, market access conditions have significantly improved. As stakeholders of those reforms, the public institutions who are suppose to act in coordination, supervision, monitoring, dispute settlement, institution and follow-up of rules and regulations arbitrates more than coordinates. The private sector which is expected to facilitate the synergy and development of consensual reforms is relatively disorganized and exert no meaningful influence at the national level, in the contrary of the regional and multilateral institutions (CEMAC, ACP group, WTO, Franc Zone, Commonwealth, etc.).

As result of that trade and investment policy environment, growth has been moderate and volatile since 1980, with an average annual growth of 3.7% between 1980 and 2004. However, between 1980 and 1982, real GDP recorded a sustained average annual growth of 6.3% boosted by agricultural and oil exports. As from 1983, the combined negative effects of unsuitable domestic policy options and poor international market conditions gradually dragged the country into the economic crisis that lasted from 1987 to 1994. The economic recovery started in 1994 and continued till 2004 thanks to the combined efforts of authorities to implement prudential economic, trade, fiscal and monetary policy reforms. This recovery could have been greater, if the country took full advantage of the market access opportunities offered. However, it will still lose preference margins if those opportunities are eliminated.

It was not easy to clearly identifying the costs of the reforms. Some theoretical hypotheses driven for the ‘infant industry’ theory were confirmed (worsening of the deficit of the current account balance) while others were not (losing of jobs, lowering of wages). The positive evolution of consumption, export and import differentiation, and growth comforts the theoretical expectations of long term effects superior to the related adjustment costs of the reforms. However, the effects on investment are still awaited. The complementary measures to maximize the benefits of trade and investment policy reforms, reduce their costs, and fully reveal their expected theoretical effects identified are those likely to help uplift the remaining institutional and economic constrains mainly related to the shortcomings of consultation, coordination, implementation, monitoring and evaluation mechanisms, the effective enforcement of the investment law and the creation and effective functioning of all related institutions, and improving of the business environment and competitiveness of the economy. The growth determinant forecast model results shows that, these reforms will play key role in production growth in Cameroon, though in a different manner in each of the production sectors, according to their specificities.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Created: Bamou, E. (4/10/2006)
Updated: Bamou, E. (4/25/2006)
Visits: 2,926
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