An Empirical Analysis of the Modulating Effect between Oil and Non-Oil Revenue in Explaining Economic Growth in Cameroon

  • Derrick Fossong The university of Bamenda
  • Dickson Thomas Ndamsa Department of Economics, Faculty of Economics and Management Sciences, The University of Bamenda, Cameroon https://orcid.org/0000-0003-2317-4292
  • Gilbert Zechia Mofor Department of Geography, Higher Teacher Training College, University of Bamenda, Cameroon. Email: moforgz@gmail.com
Keywords: Oil and non-oil revenue, Economic growth, autoregressive distributed lag, bound test

Abstract

Oil is expected to amplify the impact of technology and create tremendous economic prosperity in oil exporting countries. In this context, this paper examines the effects of oil and non-oil revenue on economic growth in Cameroon, with emphasis on their modulating role. In this endeavor, used is made of time series data spanning from 1980 - 2018 and an Autoregressive Distributed lag (ARDL) model to estimate the long and short-run effects of these variables on economic growth. Results indicate a long-run relationship between GDP, oil revenue, non-oil revenue, gross capital formation and general government expenditure. The long term results reveal that oil revenue registers a positive and insignificant effect on economic growth while non-oil revenue has a negative and significant effect on economic growth. However, in the short-run both oil and non-oil revenue register positive and significant effects on economic growth. However, when the two revenue sources were interacted, the results indicate that oil and non-oil revenue are competitive in spurring economic growth in the long term. These findings suggest that public policy interventions should improve its revenue collection mechanism through the strict implementation and proper monitoring of the oil agencies so as to reduce revenue leakages resulting from the embezzlement of funds. These results further suggest that government should improve its agricultural processing and its manufacturing sector.

Author Biography

Dickson Thomas Ndamsa, Department of Economics, Faculty of Economics and Management Sciences, The University of Bamenda, Cameroon

Ndamsa Dickson Thomas holds a PhD in Economics, funded by the Council for the Development of Social Science Research in Africa (CODESRIA). He has successfully conducted research on two projects with funding from the African Economic Research Consortium (AERC). He has published scientific research articles and book articles in peer review journals such as Revue d’Economie Appliquée, EuroEconomica, African Integration and Development Review, Journal of Entrepreneurship: Research & Practice, Athens Journal of Business and Economics, Asian Journal of Economic Modelling, Journal of Energy and Development, Journal of Economics and Finance etc. He is a consultant with AFROBAROMETER in the domain of economic data collection and analyses.

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Published
2021-05-07
Section
Articles