The Impact of CEMAC Bilateral Trade on the Economic Growth of Cameroon: Evidence from the Augmented Solow Model

Abstract

Economists view international trade as an engine to the economic growth of nations. Specifically, international trade is believed to promote the efficient allocation of resources, allows countries to experience the benefits of scale, facilitates the diffusion of knowledge, fosters technological progress and encourages competition. As a result, policy makers continue to undertake socio-economic, legal, political and institutional reforms in order to boost international trade. The study examines the impact of bilateral trade in the Economic and Monetary Union of Central African States (CEMAC) on the economic growth of Cameroon for a forty six year period from 1972 to 2018 using data collected from the World Bank and the International Monetary Fund. Through the adoption of the Poisson Pseudo Maximum Likelihood Estimator (PPML), the study finds out that while Cameroon’s bilateral trade with other CEMAC member States had an insignificant impact on the economic growth of Cameroon. Also, total labour force, government investment in education, government investment in fixed capital and the creation of CEMAC as a trade bloc all have a positive impact on the economic growth of Cameroon. The study recommends that policy makers in Cameroon and the CEMAC region as a whole should put in place laws, policies, measures and structures that boost bilateral trade within the CEMAC region in a bid to foster the economic growth of Cameroon as well as the economic growth of the CEMAC region as a whole.

Keywords: International trade, Economic growth, CEMAC, Poisson Pseudo Maximum Likelihood (PPML) Estimator.

DOI: 10.7176/JESD/11-10-19

Publication date:May 31^st 2020