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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

Published June 20, 2015

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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.


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


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