preloader

Article DetailsArticle Details

The Effects Of Government Spending On Private Investments And Economic Growth In Cameroon

The Effects Of Government Spending On Private Investments And Economic Growth In Cameroon

DATE PUBLISHED
Published June 20, 2015
SECTION
Articles

Author Details

Abstract

The main objective of this study is to analyze the effects of government spending on private investments and economic growth in Cameroon. On this issue, a majority of empirical studies as well theoretical ones highlight an ambivalent link between the three concepts according to the context, neglecting the effects of
the recurrent expenditure. The particularity of this study lies in the integration of this aspect for the period between 1977 and 2010 in Cameroon. Going from the studies by Nubukpo (2001) and N’Guessan (2003), an ARDL (Autoregressive Distributed Lag) model is used in our methodology, our variables being integrated of order zero and 1. With data from the CD-Rom of the World Bank and African Development Bank (2011) and after carrying out preliminary unit root tests in order to avoid spurious regressions, the parameters of the model are estimated by OLS (Ordinary Least Squares). The results show that in the components of government spending, it is public investment that has a significant effect on private investment and economic growth in the short run. However, this
public investment has a crowding-out effect on private investment in the long run due to the obsolete state of infrastructures which reduce growth by preventing the development of private investments. It is the same with the effect of recurrent expenditure on growth. Thus, the orientation of public investment expenditure
towards durable infrastructures and the rationalization of recurrent expenditure constitute a judicious option to stimulate economic growth in Cameroon.

Keywords

Government spending, Private investments, Economic growth, Autoregressive Distributed Lag (ARDL), Cameroon.

References

Aschauer, D. A. (1989a), “Is government

spending productive?” Journal of Monetary

Economics 23: 177-200.

Aschauer, D. A. (1989b), “Public investment and

productivity growth in the Group of Seven”.

Economic Per-spectives13:17-25.

Aschauer, D. A. (1990), Why is infrastructure

important? In is there a shortfall in public capital

investment? ed. Alicia Munnell. Boston:

Conference Series of Federal Reserve Bank of

Boston.

Aschauer, D. A. (1986), “Explaining relationship

between public and private investment in LDCs:

An empirical investigation.” Mimeograph, World

Bank, Washington, DC.

Aschaver (1986), “ Explaining relationship

between public and private investment in LDCs:

An empirical investigation “. Mimeograph,

World Bank, Washington, DC.

Atangana, O. (2004), « Les effets redistributifs

des dépenses publiques d'éducation au

Cameroun », mémoire de D.E.A., université de

Yaoundé II.

Blejer, M. I. and Mohsin, S. K. (1984a),

“Government Policy and Private Investment in

Developing Countries “, IMF Staff Papers, n° 31.

Blejer, M. I. and Mohsin, S. K. (1984b),

“Government policy and private investment in

developing countries”, IMF Staff Papers 31: 379-

Calvo (1985), “The impact of public investment

on private investment spending in Latin America:

-95.”Atlantic Economic Journal 28 (2): 210-

Cashin, P. (1995), “Government spending, taxes,

economic growth”, IMF Staff Papers 42 (2): 237-

Chandra, R. (2004), “Government size and

economic growth: an investigation of causality in

India “, Indian Economic Review, Vol. 39, No. 2,

pp. 295 – 314.

Dar, A. and Amirkhalkhali, S. (2002),

“Government size, factor accumulation and

economic growth: evidence from OECD countries

“, Journal of Policy Modeling, Vol. 24, pp. 679 –

Dervis, K. and Cetri, P. (1987), “The

macroeconomics of successful development: what

are the lessons?” NBER Macroeconomics Annual,

Cambridge, Mass, National Bureau of Economic

Research.

Dessus, S. and Herrera, R. (2000), “Public

capital and growth: a panel data assessment “,

Economic Development and Cultural Change,

Vol. 48, No. 2, pp. 407 – 418.

Dévarajan, S., Swaroop, V. and Heng-Fu

(1996), « The composition of government

spending and economic growth », Journal of

Monetary Economics, Vol. 37, pp. 313 – 344.

Dhanasekaran (2001), “How Investment of

Public Infrastructure Affects economic growth”,

Applied Economics 24, pp. 45-56.

Diamond, J. (1989), “Government expenditure

and economic growth: an empirical investigation”,

IMF Working Paper No. 89/45.

Dickey, D.A. and Fuller, W.A. (1981),

"Likelihood Ratio Statistics for AutoregressiveTime Series with a Unit Root", Econometrica, 49,

pp. 1057-1072.

Driver, C. (1994), “The case of fixed investment

in Britain’s economic performance”, Buxton, T.,

Chapman, P. and Temple, P. (eds.), London, Rout

ledge.

Easterly, W. and Rebelo, S. (1993), " Fiscal

Policy and Economic Growth: An Empirical

Investigation". Journal of Monetary

Economies,(32), December, pp. 417 – 458,

Economic Growth in Egypt”, Journal of

Development Studies, n° 36, vol. 4, pp. 38-43.

Evans, P. and Gregorios, K. (1994), “Are

government activities productive? Evidence from .

Ghura, D. and Hadjimichael, M. (1996),

“Growth in Sub-Saharan Africa “, IMF Working

Papers, Vol. 43, No. 3, pp. 605 – 631.

Greene, J. and Villanueva, D. (1991), "Private

Investment in Developing Countries", IMF Staff

Papers, Vol. 38, N°1, Mars.

Grellet, G. (1982) : « Les structures économiques

de l’Afrique noire », Coll. Tiers Monde, ed.

P.U.F.

Grier, K. B. and Tullock, G. (1989), “An

empirical analysis of cross-sectional economic

growth, 1951-80”, The Journal of Monetary

Economics, 24.

Herrera, R. (1997), « Un modèle convexe

d’équilibre général dynamisé avec croissance

endogène par accumulation publique de capital »,

XVIIème congrès de l’AFSE, Paris, septembre,

pp. 18-19.

Hechler, N. (1993), « Investissement Privé :

Effets de la Dette Externe et l'Investissement

Public », Cahiers de Recherches Economiques N°

, Université de Lausanne, Département

d'Econométrie et d'Economie Politique, Suisse,

Mai.

Holtz-Eakin, D. (1994), “Public-sector capital

and productivity puzzle”, Review of Economics

and Statistics 76 (1): 12-21.

IMF (2011), « Cameroun: Article IV

consultation–staff report », IMF Country Report

n°11/266, Septembre.

IMF (2011b), « Cameroun: Consultations de 2010

au titre de l’article IV », Rapport du IMF

n°10/259, Mars

James, M. and Tullock, G. (1961), The Calculus

of Consent.

Jones, L.E. and Manuelli, R.E. (1990), “A

convex model of equilibrium growth: theory and

policy implications “, The journal of Political

Economy, 98, October, pp. 1008-38.

Kamajou, F. (1984), « L’Economique de

l’Interventionnisme dans le Développement » in

Les organismes d’intervention en milieu rural

dans le processus de développement, séminaire

international, Dschang (pp. 25-38), CEPER,

Yaoundé, Cameroun.

Kamgnia Dia, B., Wangun, L. S., Tatsinkou, C.

et Afor, J. (2008), « Bénéfices acquis et ciblage

des pauvres dans les dépenses publiques de santé

et d'éducation au Cameroun », PPMA Working

Paper, PEP.

Keho, J. (2004), “The nonlinear accelator and the

persistence of business cycles” Econometrica Vol

, pp. 16-17.

Khan, M. and Kumar, M. S. (1997), “Public and

private investment and the growth process indeveloping countries”, Oxford Bulletin of

Economics and Statistics 59: 69-88.

Khan, M. and Reinhart, C.M. (1990), “ Private

Investment and Economic Growth in Developing

Countries “, World Development, Vol.18, N° 1.

Kim, S. (1992), “Taxes, growth and welfare in an

endogenous growth model”, Ph. D dissertation,

Department of Economics, University of Chicago.

Knight, M., Loayzan, Villanuevad (1993),

“Testing the Neoclassical Theory of Economic

Growth”, IMF Staff Papers.(40), September,

pp.512-541.

Kuitcha, R. (2005), « Infrastructures publiques et

croissance au Cameroun », mémoire de D.E.A.,

Université de Douala.

Levine, R. (1991), “Stock markets, growth and

tax policy “, The Journal of Finance, 46, pp. 1445-

Mansouri, B. (2003), « Déséquilibres financiers

publics, investissement privé et croissance

économique au Maroc », Analyse Economique et

Développement, Agence Universitaire de la

Francophonie (AUF).

McKinnon, R. I. & Shaw (1973), “ Money and

Capital in economic development “, The

brooking institution, Washington D.C.

Mfoulou, P. (2007), « Capital public et

productivité en zone CEMAC », mémoire de

D.E.A., Université de Yaoundé II.

Munnell, A. H. (1990), “Why has productivity

growth declined? Productivity and public

investment”, New England Economic Review,

January/February, pp. 3-22.

N’Guessan, B. A. (2003), « Structure des

dépenses publiques, investissement privé et

croissance dans l’UEMOA ».

Nelson, M. and Singh, R. (1994), “The Deficit-

Growth Connection: Sorne Recent Evidence from

Developing Countries”, Economic Development

and Cultural Change, 43,Octobre 1994, pp.167-

Nubukpo, K. (2001), « Dépenses publiques et

croissance des pays de l’Union économique et

monétaire ouest-africaine », Afrique

Contemporaine, Vol. 2, No. 222, pp. 223 – 250.

Odedokun, M. O. (1997), “Relative effects of

public versus private investment spending on

economic efficiency and growth in developing

countries”, Applied Economics 29: 1325-36.

Ongono, P. (2006), « Dépenses publiques et

croissance au Cameroun : la taille optimale de

l'Etat », mémoire de D.E.A., université de

Yaoundé II.

Oshikoya, T. W. (1994), “Macroeconomic

determinants of domestic private investment in.

Africa: An empirical analysis”, Economic

Development and Cultural Change 42: 573-96.

Pesaran, M., Shin, Y. and Smith, R. J. (2001),

“Testing for the existence of a long-run

relationship”, DAE Working Paper No. 9622,

Department of Applied Economics, University of

Cambridge, Cambridge, UK.

Phillips, P.C.B. and Perron, P. (1988), “Testing

for a Unit Root in Time Series Regression”,

Biometrika.75, pp. 335-346.Rajhi, T. (1996), « Dynamique des politiques de

croissance », Collection Approfondissement de la

Connaissance Economique, Economica, Paris.

Ramirez, M. D. (1994), “Public and private

investment in Mexico, 1950-90: An empirical

analysis”, Southern Economic Journal, 61 (1): 1-

Ramirez, M. D. (2000), "The impact of public

investment on private investment spending in

Latin America: 1980-95", Atlantic Economic

Journal, 28 (2): 210-25.

Rogoff, K. (1985), “Globalization and global

disinflation”, in Fed. Reserve Bank Kansas City

conference on Monetary Policy and Uncertainty:

Adapting to a changing Economy, Jackson Hole,

(2003), August.

Tamba, I. (2005), « Etat et le développement

dans les pays de la CEMAC : une perspective

historique », études et statistiques de la BEAC.

Tanzi, V. and Zee, H. (1997), “ Fiscal policy and

long-run growth “, IMF Staff Papers, Vol. 44, pp.

– 209.

Tatom, J. A. (1991), “Public capital and private

sector performance”, Federal Reserve Bank of

St.Louis Review 73 (3): 3-15.

Tenou, K. (1999), «Les déterminants de la

croissance à long terme dans les pays de

l’UEMOA, Notes d’Information et Statistiques »,

Etudes et Recherches, No. 493, BCEAO.

Touna Mama, Kamgnia Dia, B., Ouédraogo, J.

et Zeufack, A. (2002) : « Ajustement structurel et

investissement privé en Afrique : les cas du

Burkina Faso, du Cameroun et de la Côte

d'ivoire », les cahiers du SISERA.

Ventelou, B. (2002), “ Corruption in a model of

growth: political reputation, competition and

shocks “, Journal of Public Choice, Vol. 110, No.

-2, pp. 23 – 40.

Yuen, C. (1990), “Taxation, human capital

accumulation and economic growth”, University

of Chicago, working paper.

Zhu, X. (1992), “Optimal fiscal policy in a

stochastic growth model”, The Journal of

Economic Theory, 58, pp. 250-29.

Subscribe
to our newsletter

Subscribe
to our newsletter