Impact of Productivity and Real Effective Exchange Rate on the Competitiveness of Manufacturing Exports: The Case of Cameroon
Bodel Gnintedem Aymele1,2
1Statistics and Economics, Sub Regional Institute of Statistics and Applied Economics, Yaoundé, Centre, Cameroon; 2Macroeconomics, United Nations Economic Commission for Africa/Sub Regional Office for Central Africa, Yaoundé, Centre, Cameroon

The manufacturing industry in Cameroon is analyzed in this paper. The study, using data from the National Institute of Statistics of Cameroon, covering the period 1993-2008, focuses on the impact of productivity and real effective exchange rate on the competitiveness of manufacturing exports. Primary products are an increasingly significant export in Cameroon. Indeed, according to research from the center of the OECD Development published August 14, 2001 on the promotion of manufacturing competitiveness in sub-Saharan Africa in general and Cameroon in particular, commodities represent about 60% of exports Cameroon. Thus, to take advantage of its openness to the world economy, Cameroon is expected to reduce its dependence towards raw materials. To do so, manufacturing can play an important role. The variables used in our study are: manufacturing value added, manufacturing exports, capital, number of employees by industry manufacturing and real effective exchange rate. A production function and an export function are estimated in order to determine the total factor productivity in each industry and manufacturing to measure the effect of productivity and real effective exchange rate on manufacturing exports. The evolution of the real effective exchange rate and nominal in Cameroon between 1993 and 2008 is also discussed in this document. The results indicate that the branche industry meat and fish and Textile and clothing are the branches where the total factor productivity is important. The export function was estimated using a panel data analysis for the branches of manufacturing industry; it appears that the total factor productivity has a positive and significant effect at 5%. An increase of 1% value of total factor productivity in Cameroon causes all things being equal to a 3.5% increase in manufacturing exports from Cameroon. The real effective exchange rate is significant at 10% after a robust estimate. An increase of 1% value of the real effective exchange rate in Cameroon causes all things being equal a reduction of 0.75% of manufacturing exports from Cameroon. The manufacturing export performance depends therefore a part of the real effective exchange rate and secondly the total factor productivity. Thus, increased manufacturing productivity should be a priority for Cameroon since it would all things being equal an increase in manufacturing exports. So to accelerate growth and competitiveness, we need to promote manufacturing exports, develop domestic markets. The financial system must be strengthened and ensure its proper operation can make it more attractive to traders.

References:

Balassa, Bela (1990), Incentive Policies and Export Performance in Sub-Saharan Africa, World development, Vol. 18, No. 3, pp. 383-391.

Latreille T. et A. Varoudakis (1997), Les facteurs structurels de la compétitivité manufacturière: une analyse en données de panel pour le Sénégal, Revue Economique, Vol. 48, No. 3.

Keywords: Total factor productivity; Real effective exchange rate; Competitiveness; Manufacturing and random effects model

Biography: My name is AYMELE GNINTEDEM Bodel, I was born on March 21, 1986 in Douala, Cameroon. I'm single with no children and student at the Sub Regional Institute of Statistics and Applied Economics at the cycle of Engineers statisticians and economists. In addition, I hold a master of mathematics at the University of Yaounde I and I participated in the survey on “Confidence Index households in Yaounde and views on developments in the City” organized by my institute where I was controller. I did my traineeship at the United Nations Economic Commission for Africa/Sub Regional Office for Central Africa and my interests are sports and reading.