Implications Of Foreign Direct Investment, Financial Development And Real Exchange Rate For Economic Growth In Cameroon

Victalice Ngimanang Achamoh () and Francis Menjo Baye ()
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Victalice Ngimanang Achamoh: University of Dschang
Francis Menjo Baye: University of Yaoundé II

EuroEconomica, 2016, issue 1(35), 149-163

Abstract: This paper assesses the effects of foreign direct investment (FDI), financial development and real exchange rate (RER) on economic growth in Cameroon using Cameroon’s annual time series data spanning the period 1977 - 2010. To address these objectives, residual based Engle-Granger test, the OLS based Autoregressive Distributive Lag (ARDL) bound testing and maximum likelihood based Johansen cointegration techniques are employed. Results of Unit roots tests show that all the series possessed unit roots at level or first difference form. The ARDL model and VECM results reveal that the RER has a significant negative effect on economic growth, while FDI and Financial Development relate positively to economic growth. These findings have implications for stimulating economic growth by increasing efficiency of the financial sector in allocating credit to the private sector and preventing real exchange rate appreciation in the shortrun.

Keywords: FDI; Financial Development; RER; Economic Growth; bound test and VECM (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:dug:journl:y:2016:i:1:p:149-163

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