Economic Growth in Cameroon

Background Information Notwithstanding the secular decline in real GDP experienced during the period 1987-93, the Cameroonian economy remains one of the largest in the CFA franc zone, with a GDP of about $9 billion in 1996. Compared with other sub-sharan African countries, Cameroon has one of the most diversified production and resource bases, as it produces and exports a broad range of commodities.

Cameroon is a net oil exporter; oil production, although declinging steadily since 1986, still amounted to 37 million metric tons in 1996 and represented 8% of GDP. Nevertheless, agriculture has remained the mainstay of the economy and employs over 70% of the labor force. The recent history of cameroon’s economic and social development is characterized by two sharply diverging periods in economic performance.

Most of the period from independence in 1960 to 1986 was characterized by fiscal balance, a rising investment-GDP ratio, rising human capital stock, and expanding real GDP. In contrast, the period 1987-93 was marked by declining terms of trade, deteriorating external competitiveness, a declining investment –GDP ratio, stagnating or declining human capital stock, rising fiscal imbalances, and shrinking output. Problem statement

Since independence, private investment is creating employment, improving infrastructure and improving living standards of Cameroonians. Cameroon being a developing country with low income rates, unemployment, poverty, and under exploitation of natural resources, is a clear prove that the government incapable of meeting or giving Cameroon a favorable economic growth. This incapability of the government to give Cameroon a favorable economic growth, makes the government to leave out most of its companies for private investment, such as SONEL.

Moreover most of Cameroonian important companies are run and own by private investors such as PILCAM,UNALOR,BOCOM,EURO OIL, and CONGELCAM just to name a few, that has led to the economic growth of Cameroon. Romer’s (1986) model assumes that technological change is endogenous and that private investment raises the level of technology for the whole economy. In this model increases in private investment raise growth in the steady-state.

This study contributes to the empirical growth literature in three ways. First, economic growth is analyzed for an individual country-Cameroon-with data covering form 1960 till date. In addition , an investigation of the growth determinants for Cameroonian economy and focus on the institutional and historical aspects of the country. Secondly, the contributions of private and government investments to the growth of the Cameroonian economy investigated.

Thirdly, following the endogenous growth models by Lucas (1988), becker, Murphy and tamura(1990) and romer(1990), the role of human capital is investigated. The robustness of the effect of private investment on growth is examined by including variables related to monetary and fiscal policies, external competitiveness, the terms of trade, and the influence of the oil sector. Objectives The main objectives of this research is to investigate the role of private investment in the economic development of the Cameroonian economy.

The specific objectives of the study are * Identify the problems of economic growth in Cameroon * Assess private investment as an engine to economic growth * Make necessary recommendations Hypothesis Here, we are going to see if private investment actually enhance economic growth in Cameroon, we are going to use 2 types of hypothesis which are the null and the alternative hypothesis * Ho: private investment is an engine to economic growth in Cameroon H1: private investment is not an engine to economic growth in Cameroon. Significance Of The Study. The research carried out on the role of private investment in the economic development of Cameroon has its significance in 5 areas which are; * Africa as a whole; with the slow rate of economic growth is Africa, this research will help African leader to encourage and enable private investment in their economy since as it is the main backbone to economic growth. The Cameroonian society; this project will help many Cameroonians who are naive about the growth of the Cameroonian economy, to know the main reasons for its slow rate and what they need to do to improve on the economy. * The government; this project will help the government to better strategise in encouraging foreign and domestic investors, by reducing tax rates and interest rates, which will enhance economic growth. This project will serve as a resource base to students, who wish to carry out research in this field and better still inspire them to focus on investment given the low rate of employment in Cameroon. Limitations of study This area of is in Cameroon in general and the littoral region (douala) in particular. It does not extend to other areas due to the fact that there is inadequate timing and also, most private investments will not like to reveal all of their information to the researcher, thereby making it difficult for the researcher.