Exploring Foreign Direct Investments in Developing African Countries: Their Effects on the Economic Growth in Cameroon (2006-2011)

Efiong Akwaowo

doi:10.4236/ib.2013.51003

Abstract

This study explores Foreign Direct Investment (FDI) and its effects on the economic growth in Cameroon within the period 2006-2011. The purpose of this study is to understand the reason why increased FDI had not led to more economic growth in Cameroon. Aghion’s endogeneity growth theory was used as a guide to data collection and analysis. Research data were collected from 20 investment managers with close relationships with Cameroon. The participants included five from each subgroup of energy, health care, technology, and financial institutions, in the United States. The study participants expressed strong commitment towards economic growth in Cameroon. The responses from the study participants showed inconsistency with the literature review and the belief that FDI generates economic growth in the developing countries. Moreover, the respondents reported bureaucracy and corruption as the possible challenges facing the economic growth in Cameroon. The research participants believed that eco-political factors directly affect the economic growth in Cameroon. Policy implications and recommendations for future studies were stated. It was recommended that the country must improve its financial market by removing financial restraints that hinder Cameroon firms from getting into export markets. In addition, the Cameroon leaders should focus on improving human capital through training and development. Training methods must be improved; a comprehensive plan for training and development must be implemented. Moreover, Cameroon leaders should ensure that their attention to FDI does not overshadow domestic small businesses. The study established that although there were positive relationships between FDI and economic growth in the developing countries such as Cameroon, the findings were inconclusive. Future research should further study the effects of FDI on economic growth using endogeneity growth theory in multi developing countries to determine if the study findings from this dissertation can be supported in other settings.

Highlights

Cameroon is a country located in the central West Africa
To explore the reason why the increased inflow of Foreign Direct Investment (FDI) into Cameroon has not led to a commensurate increase in economic growth in the country, more investigation of this question generated the understanding of the following additional questions: Q1: How do the missions of foreign investors affect the economic growth in developing countries such as Cameroon according to investment managers in the energy, health care, technology, and financial industries in the United States?
This study was encouraged by the deteriorating economic growth in Cameroon despite increase of FDI inflow into the country (Forgha, 2009)

Summary

Introduction

Cameroon is a country located in the central West Africa. Based on 2011 estimate, the country has a population of about 19,711,291 [1]. The government enacted a series of legal instruments to encourage and boost FDI inflow at the national level in order to foster the economic growth Such instruments included the Investment Code of 1990, amended in 1994; the Patent Rights Act, called the Bangui Agreement, initially enacted in March 1977 and amended in February 1999; the Paris Convention for the Protection of and promotion of Industrial Property of 1883, revised in 1990; and bilateral investment treaties for the protection and promotion of investments signed in 1966 (Forgha, 2009). The reasons for Cameroon’s poor economic growth despite the increase in FDI dollars have not fully been identified and addressed

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