Journal of Economics and Development Studies

Long-Run Growth and Economic Policy in Cameroon: A Cointegration Analysis
Elkanah E. Faux Ph.D

Abstract
In order to investigate what drives long-term economic growth, it is necessary to isolate growth that results from accumulation of factors from that resulting from the quality of those factors, which in turn depends on government policies and human capital accumulation. This is critical in guiding the implementation of medium and long-term growth strategies of the country. This study has investigated the impact of economic policy on long-term growth in Cameroon. Specifically, the study sought to (1) examine the relationship between economic policy and economic growth in Cameroon, (2) investigate the impact of human capital on economic growth and (3) provide appropriate suggestions that will enhance the efficiency of government policies in promoting economic growth in Cameroon. In order to achieve this, we employed econometric techniques beginning with time series analysis, to determine the impact of economic policy on the stability of long run economic growth in Cameroon. The study covered a period of time when Cameroon‟s economic performance was mixed: a decline, then some recovery, albeit sluggish since the mid-1990s, hence the need to disentangle the contribution of policies to growth from that arising from factor accumulation. Before estimating the growth equation, the characteristics of the data was examined to determine whether the data is stationary or not, that is, whether it has unit roots and also to determine the order of integration. We then performed the Johansen cointegration test to determine the long term relationship between economic growth and the relevant policy variables. The results from the error correction model show that capital is a robust determinant of economic growth in Cameroon. The results further show that higher levels of inflation rates are harmful to economic growth in Cameroon. The implication for these results is that prudent policies, especially well implemented macroeconomic policies, can positively affect economic growth in Cameroon.

Full Text: PDF     DOI: 10.15640/jeds.v7n4a1