Multinational activities and economic growth in Cameroon

 

Njimanted Godfrey Forgha¹*, Joseph Tosam Ngong² and Nembo Kedju Lionel³

 

Research Article | Published September 2016

Journal of Economics and International Business Management, Vol. 4(2), pp. 49-57.

 

¹Associate Professor of Economics – HTTC, Department of Economic Sciences, University of Bamenda, NWR, Cameroon.
²Ph. D in view, Department of Economics, University of Bamenda, Cameroon.
³Research Assistant, Department of Economics and Management, University of Buea, Cameroon.

 

*Corresponding author. E-mail: unicalub@yahoo.com., Tel: (+237)677924471. 

 

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Supporters of globalisation claimed that it has contributed significantly to the inflow of foreign capital from advanced to developing countries through the activities of Multinational corporations (MNCs), and has created an avenue for technological transfer. Given the numerous controversies in the potential benefits of MNCs, this study aims at examining the effects of the activities of multinational corporations on the economic growth of Cameroon. Thus, secondary data were collected from 1975 - 2015 and with the use of the Two-Stage Least Squares Estimation Technique, the coefficients of the variables were estimated. The main findings reveal that Gross Domestic Product Per Capita and Political Stability positively and significantly determined Foreign Direct Investment (used as proxy to measure the effect of MNCs) in Cameroon. While Foreign Direct Investment and Gross Fixed Capital Formation significantly influence economic growth in Cameroon, Gross Fixed Capital Formation influenced GDP (Gross Domestic Product) Per Capita positively than FDI. In conclusion, the contribution of MNCs to economic growth was enhanced by its interaction with the level of infrastructural development, return on investment and political stability in the host country. On the basis of these findings, it was therefore recommended that economic growth policy that aims at increasing GDP per capita both at the short run and long run should be pursued in order to heighten MNCs in Cameroon. Also, efforts should be directed in deepening the activities of the stock market since increased level of capital formation in Cameroon has the potential to drive the economy positively. Finally the quality of the workforce should be improved upon through quality education. Diversification especially in the tertiary education in favour of technical and commercial profession oriented education should be reinforced for targeted growth.

 

Keywords: Multinational Corporations, Foreign Direct Investment, Economic Growth, Two-Stage Least Squares, Political Stability, Per Capital Income.