Abstract
PurposeThe purpose of this paper is to examine key macroeconomic determinants on Cameroon's economic growth from 1970 to 2018.Design/methodology/approachData were obtained from the World Development Indicators and applied on time series data econometric techniques. The auto-regressive distributed lag (ARDL) bounds model analyzed the data since the variables had different order of integration.FindingsThe results showed long and short runs’ positive and significant connection between economic growth in Cameroon and government expenditure; trade openness, gross capital formation and exchange rate. Human capital development, foreign aid, money supply, inflation and foreign direct investment negatively and significantly affected economic growth in the short and long-runs. Hence, the macroeconomic indicators are not death.Research limitations/implicationsThe present research paper has tried to capture the impact of nine macroeconomic determinants on economic growth such as the government expenditure (LNGOVEXP), human capital development (LNHCD), foreign aids (AID), trade openness (LNTOP), foreign direct investment (LNFDI), gross capital formation (INVEST), broad money (LNM2), official exchange rate (LNEXHRATE) and Inflation (LNINFLA). However, these variables have the tendency to affect each other in a unidirectional or bidirectional manner. Further, the present research paper is unable to capture the impact of other macroeconomic variable due to the unavailability of data.Practical implicationsThe study recommends that Cameroon should use proper planning and strategic policy interventions to achieve higher sustainable economic growth with human capital development, foreign aid, money supply, foreign direct investment and moderate inflation.Social implicationsMacroeconomic indicators, if managed well, increase economic growth.Originality/valueThis paper to the best of the researcher's knowledge presents new background information to both policymakers and researchers on the main macroeconomic determinants using econometric analysis.
Highlights
Economic development and growth have always been central to human society
The results indicated that foreign assistance, exports, imports, labor employed and trade openness were positively associated with economic growth, while foreign direct investment, domestic investment and gross national savings were negatively associated with economic growth
Government expenditure, human capital development, foreign aid, trade openness, foreign direct investment, gross capital formation, money supply, exchange rate and inflation were regressed on economic growth
Summary
Economic development and growth have always been central to human society. The topic continues to dominate public debate at the heart of human concern in today’s globalized world. Cameroon has gone through a diverse number of macroeconomic changes since independence, Country Assistance Evaluation (CAE) (2001). Since 1986, Cameroon’s macroeconomic indicators have been declining primarily due to the fall in world commodity prices and internal problems. This study identifies the most effective macroeconomic variables to boost Cameroon’s economic growth and development. Cameroon was one of Africa’s wealthiest nations in natural resources until 1980s, when exports commodity prices for petroleum, cocoa, coffee and cotton declined. This resulted in overvaluation of the currency and economic mismanagement that led to an economic downturn. Cameroon retains oil reserves and favorable agricultural conditions, making it one of the best in sub-Saharan Africa (SSA)
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