DETERMINANTS OF BILATERAL TRADE BETWEEN CAMEROON AND HER TRADING PARTNERS: EMPIRICAL TEST OF THE GRAVITY MODEL

Exports have continued to play an important role in the economy of many developing countries. In this way the level of economic growth, employment and the balance of payments can be promoted. In Cameroon, the government has initiated several trade policy reforms aimed at promoting the export sector. This notwithstanding the country’s share in total world exports remains very low. Given the central role of exports in the economy, it was important to identify the plausible factors affecting export flows between Cameroon and her trading partners using an augmented gravity trade model. The panel dataset used covered a period from 1995 to 2014. The results showed that Cameroon’s GDP, importer’s GDP, real exchange rate, population and official common language had a positive and statistically significant effect on Cameroon’s exports. The study further showed that the distance between Cameroon and its trading partners had a negative and statistical significant effect on export flows. These results provide some policy insights which can enhance trade and foster economic growth, notably improvement in infrastructural development which is linked to transportation cost.