Financial determinants of industrialisation in Cameroon

Abstract

This article assesses the financial determinants of industrialisation in Cameroon over the period 1960 to 2015. The theoretical foundation is based on the two gap model of financing economic development. The estimation technique is based on the Autoregressive Distributed Lag (ARDL)-bounds testing approach. The paper establishes a long-run relationship between manufacturing value added and oil taxes and air transport taxes. We find that oil taxes and air transport taxes have a positive and significant effect on manufacturing value added in Cameroon – both in the short run and in the long run. The study, therefore, recommends that, appropriate policies of taxes’ collection and rational spending should be pursued in Cameroon, in order to foster financing of industrialization. But also, authorities should improve credit policies and external sources of finance such as foreign direct investments and foreign aid.