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