The Effects of Industrialization on the Economic Growth of Cameroon

Abstract

The main objective of this research work is the Effect of Industrialization on the Economic Growth of Cameroon. The Industrial oriented industries have a higher marginal product of labour and as a result, they pay higher wages than other sectors, whereas an important component of technological progress which matters a lot for sectoral allocation, largely depends on the level of industrialization.

The industrialization trend broadly depends on government investment codes if they are fully implemented. The trend of industrialization also depends more on government decision on industrial policies which is a major economic and political agenda and had to prompt the researcher to carry out this research with the topic “Effect of industrialization on the economic growth of Cameroon”.

The researcher had as main objective to investigate the effect of industrialisation on the economic growth of Cameroon. The specific objectives included examining the effect of the trend of industrialisation, population growth, agricultural value-added, industrial value-added, gross capital formation on the economic growth of Cameroon.

Data for the research was collected through the secondary source and specifically from the World Bank. The findings showed that agricultural value-added affects economic growth positively. The findings show that population growth significantly affects the economic growth of Cameroon. Gross capital formation has a positive effect on the economic growth of Cameroon.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Industrialization is the process by which an economy is being transformed from primarily agricultural to one based on the manufacturing of goods. Manufacturing has a function as the main engine of economic growth and development in the world. It was discovered in the year 1950-2005 that manufacturing is the main driver of growth in developed and developing countries. There is actually a moderate impact on growth as a result of manufacturing Szirmai. Verspagen, (2015).

Achieving economic development by following the path of industrialization will likely remain important for low-income countries because they can take advantage of their backwardness relative to those countries which have already experience rapid industrialization with a disproportionately large share of manufacturing activities and could soon enter a mature stage of industrialization Haraguchi, Cheng, and Smeets,(2017).

The main task of government in the new view is to impose institutional reforms and improve governance to allow the market to perform efficiently. A decline in manufacturing, growth negatively affects the growth of all other sectors in both the short-run and the long-run. Manufacturing promotes gross private saving ratio as well as it accelerates the pace of technological accumulation you, (2017)

In Africa industrialization is being promoted through the introduction of the continental free trade Area CFTA which is aimed at fostering economic growth and alleviating poverty. It also created a single market for goods and services in Africa Landry Signe, (2017). The industrialization has been a campaign promise across the Africa continent with it acknowledge the ability to bring prosperity, new jobs and better incomes for all.

The potential impact of the CFTA includes; intra-Africa trade, manufacturing exports, job creation for youths, structural transformation and poverty alleviation in Africa. The causes of industrialization in Africa such as; a new invention, investment of capital, improve transportation, growing population, natural resources do not well cater for and so industrialization is slow. In Cameroon, the establishment of industries that are necessary toward absorbing the excess labour resource and in achieving dynamic and self-reliant economic growth in Cameroon is a failure to develop the energy, agro-industry, digital technology sectors which are the key drivers of Cameroon reconstruction’s industrialization.

The transition from an agrarian to the industrial society is not always smooth but it is a necessary step to escape the abject poverty found in less developed countries such as Ghana, Senegal. Economic and historical research has overwhelmingly shown that industrialization is linked to rising educations, longer life spans, growing individuals and national income, and improve the overall quality of life. For example, when Britain was industrializing, total national income increased by more than 600% from 1801 to 1901. By 1850, workers in the united states and Great Britain earned an average of 11 times than workers in non-industrialized nations. By 2000, the per capita income in fully industrialized countries was 52 times greater than in non-industrialized countries.

Industrialization disrupts and displaces traditional labour, encouraging workers toward a more valuable and productive activity that is accompanied by better capital goods rose, (2015). No industrialization was as rapid, unexpected and transformational as that which occurred in Hong Kong between1950 and 2000. In less than two generations the small Asian territory grew into one of the wealthiest population in the world. Industrialization in Hong Kong was accompanied by a huge number of small and medium-sized companies. Despite no pro-industrialization policies by the Hong Kong government, investment in venture capital flooded into Hong Kong from the outside. In Africa countries such as Nigeria, marginal revenue product of labour in the industrial sector are higher than the marginal revenue product of labour in the agricultural sector.

Thus the releasing of the labour force from the agricultural sector and the industrial sector increases the marginal product of labour in the agricultural sector and increases the overall revenue and output. Industrialization occurred in Sub-Saharan in two phases, the first step was done during the colonial regime in the 1920s and ended in the late 40s; the second phase of industrialization began in the late 50s and gain momentum in the 60s. Factors preventing industrialization in African include climate change, culture and education, economic development, health, human right, peace and security, sustainable development goals. The growth of the Cameroonian economy has not been stable over the years as the country’s economy has witnessed so many shocks and disturbances such as the Anglophone crisis which has been a major hindering block to economic growth and development in the country.

Thus, in this research work, the effort will be stressed more on the effect of industrialization on the economic growth of Cameroon. Before colonial rule in Cameroon, there were numerous activities undertaken by the Cameroonians. The economic activities were based mostly on primary production especially on agriculture and such activities included farming, hunting and quarrying. The coming of the western culture brought in more changes in the lifestyle of Cameroonians. The economics of Cameroon was changed from its agricultural-based to a market based for an imported manufactured product.

The colonial masters on the then days took Cameroon as a standard area of the supply of raw materials and minerals to be used in their home countries. The worst aspect of it was that they exploited these resources at a cheap price, but when their product was brought to Cameroon the prices were placed so high to exploit the nation. Furthermore, the colonial masters did not focus on making Cameroon an industrialized nation and the people were not encouraged to involve themselves in industrial activities. All these contributed to Cameroon been both technologically backward and industrious

1.2 Problem Statement

While desiring the pursue of industrialization to tackle economic growth problems, many nations have neglected the need to establish industries that are necessary towards absorbing the abundant labour resource and in achieving dynamic and self-reliant economic growth in Cameroon is the failure to develop the energy, agro-industry, digital technology sectors which are the key drivers to the reconstruction of Cameroon’s industrialization. This has contributed greatly to the low rate of economic development in Cameroon. The contribution of the industrial sector to Gross domestic product (GDP) is well below that of the tertiary sector. Cameroon, growth performance has strengthened in recent years and shown resilience through the oil price crises, with GDP growth accelerating from 4% in 2011 to 6.2% in 2015 and expected to continue at that level from 2016 to 2018.

This performance, however, has relied heavily on an ambitious public investment program which will become increasingly difficult to sustain and not enough on the private sector-led growth. To forge ahead, the government needs to address these challenges.

First is that the government needs to stimulate private sector-led growth, which will require an improved business environment and sector governance lower cost of inputs (like energy, transport, telecoms) and a better-educated workforce. Secondly, while a major infrastructure effort is required and will help private sector growth, the public experience needs to be managed more strategically and efficiently, and rely to a larger extent on complementarities with the private sector. It will also be key to maximize the benefits of the infrastructure effort through relevant sector reforms.

Finally, specific poverty reduction effort should be undertaken to address the multiple. Poverty traps affecting the various regions Al-Arief, (2016)

1.3Research questions

On the bases of the above problem, this study intends to provide answers to the following research questions;

The main research question is: What is the effect of industrialisation on the economic growth of Cameroon?

The specific questions include;

• What has been the trend of industrialisation in Cameroon over time?

• What is the effect of industrial value-added on the gross domestic product of Cameroon?

• To what extent do agricultural value-added, gross capital formation and population growth affect the gross domestic product of Cameroon?

1.4   Objective of the study

The main objective of this research is to investigate the effect of industrialisation on the economic growth of Cameroon.

The specific objective is to;

• To examine the trend of industrialisation in Cameroon over time?

• To investigate the effect of industrial value-added on the gross domestic product of Cameroon?

• Examine the extent to which agricultural value-added, gross capital formation and population growth affect the gross domestic product of Cameroon?