Structural Policies for International Competitiveness in Manufacturing

This study presents the main developments in the manufacturing industry in Cameroon, based on firm-level data covering the 1980-95 period. The emphasis is on structural factors of competitiveness. A production function and an export function are estimated in order to study the determinants of total factor productivity (TFP) and export performance. The results provide evidence indicating that openness to trade, development of skilled labour and adequate management of the real exchange rate are crucial factors for the enhancement of productivity and exports. Moreover, a mutually reinforcing relationship between productivity and export performance is demonstrated. The performance of the manufacturing sector in Cameroon has deteriorated considerably since the mid-1980s. This decline is to a degree explained by Dutch disease and inward-looking policies in the manufacturing sector, resulting in a highly overvalued real effective exchange rate (REER). Based on the estimated export and ...