Governance and economic growth in Cameroon

Abstract

Endowed with significant natural resources—petroleum, forestry and a rich agricultural base—and sufficiently skilled human resources, Cameroon has the potential to be one of the wealthiest countries in sub-Saharan Africa, yet it has not been able to develop since independence. This is an indication that resources alone cannot significantly lead to sustainable growth. This study has established that political and economic governance play a key role in growth. The paper has empirically assessed the impact of governance on the performance of the Cameroonian economy. In the paper, we have used the models of Knack (2002), Edison (2003), Baliamoune-Lutz (2005) and Easterly et al. (2006) on governance and economic growth, to establish that there is a positive and significant relationship between governance and economic growth. We have also used the results of the model by Edison (2003) to cost bad governance. Using the coefficients from his findings, we have established that if governance measures in Cameroon improved from an index of -0.72 to the sub-Saharan index of -0.49, the country’s gross domestic product (GDP) per capita would rise from US$600 to US$900. If the governance index for the country were to improve to the global level of 0.13, the GDP per capita for Cameroon would climb from US$600 to US$2,760. We have also used a study carried out by Transparency International Cameroon to reinforce the findings of Knack (2002), Edison (2003) and Baliamoune-Lutz (2005). Since progress towards good governance in Cameroon has at best been mediocre, it is not surprising that the economy has remained fundamentally under-developed. RP 250 prelims.indd 6 16/01/2014 11:19:41