Journal of Economics and Development Studies

The Impact of Foreign Direct Investment on the Productivity of Manufacturing Firms in Cameroon
Bobo Moussa, Ismaila Amadu, Ouédraougo Idrissa, Boubakari Abdou

Abstract
This paper attempts to evaluate the impact of Foreign Direct Investment (FDI) on the productivity of manufacturing firms in Cameroon. To do so, a Cobb Douglass type production function was estimated using the Generalized Least Squares method for 1,269 enterprises in 24 branches of the country’s industrial sector. Data obtained from the country’s National Institute of Statistics, for the period spanning from 2005 to 2011 was used in the econometric estimations. The findings show that FDI has an negative impact on the productivity of manufacturing firms. A 1 % increase in the productivity of foreign companies leads to a 4.4% reduction in that of domestic firms. Also, a 1% increase in multinational enterprises reduces the sales growth of domestic firms by 0.10%. From the findings, it is recommended that: first, domestic companies should invest more in research and machinery to reduce production cost and improve the quality of their products. Second, the government of Cameroon should facilitate the acquisition of technology and innovations for its home industries.

Full Text: PDF     DOI: 10.15640/jeds.v7n1a3