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

Molem Christopher Sama ,Metougue Esoh Ekwelle Eric ,Dobdinga Cletus

doi:10.7176/jesd/11-10-19

Molem Christopher Sama , Metougue Esoh Ekwelle Eric + Show 1 more

Open Access

https://doi.org/10.7176/jesd/11-10-19

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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

Highlights

A more general consensus among Economists is that international trade acts as an engine to the economic growth of nations
Such institutional structures include the Monetary Union of Central African States (UMAC) which is in charge of financial integration and the Economic Union of Central African States (UEAC) which is in charge of economic integration
Using the Fully Modified Ordinary Least Square (FMOLS) to estimate the model, the results indicate that the three measures that were used as measures of trade openness all had a positive impact on the economic growth of these countries

Summary

Introduction

A more general consensus among Economists is that international trade acts as an engine to the economic growth of nations. Policy makers of the CEMAC region for instance have put in place institutional structures and designed strategic programs in a bid to boost international trade within the CEMAC program. Such institutional structures include the Monetary Union of Central African States (UMAC) which is in charge of financial integration and the Economic Union of Central African States (UEAC) which is in charge of economic integration.

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