ABSTRACT

The study is an attempt to explain the theoretical and practical underpinning of The Impact of Trade  Liberalizations on Poverty Reduction in Cameroon has aid in reducing poverty in Cameroon through free trade, but as this study point out in its research problem, despite the role played by free trade to reduce poverty in Cameroon, Cameroon still face huge poverty impact in it community. The main objective of the study was to evaluate the extent to which trade Liberalizations can reduce the rate of poverty in Cameroon, to examine the positive and negative effect of trade liberalization on poverty reduction in Cameron, to investigate the extent to which trade liberalization contribute to development of Cameroon home industry and to evaluate the challenges faced by Cameroon to effectively reduce poverty. The study make use of two theories which are Dependency and the world system theory. The main theory is the dependency theory. Dependency theory is the result of an extensive search to find a theoretical framework to sufficiently analyze and explain both development and underdevelopment within the international system. The study made use of the Mix method research design so as to enable the collection of data from a sizable population. It also make use of questionnaire and interview as a data collection tool in order to get the respondent view, knowledge and experience. It found out that trade Liberalizations has helped in reducing poverty in Cameroon but also have some negative impact on Cameroon. content analyses, it is clear that trade has led to a massive expansion in the growth of world trade relative to world output. While world output (or GDP) has expanded fivefold, the volume of world trade has grown 16 times at an average compound rate of just over 7% per annum. In some individual countries, notably in South-East Asia, the growth of exports has exceeded 10% per annum.

CHAPTER ONE

INTRODUCTION

1.1         Background to study

The liberalisation of trade has led to a massive expansion in the growth of world trade relative to world output. While world output (or GDP) has expanded fivefold, the volume of world trade has grown 16 times at an average compound rate of just over 7% per annum. In some individual countries, notably in South-East Asia, the growth of exports has exceeded 10% per annum. Exports have tended to grow fastest in countries with more liberal trade regimes, and these countries have experienced the fastest growth of GDP. The quote from Alfred Marshall at the beginning of this paper appears to have been a profound and prescient observation. It is difficult, if not impossible, to understand the growth and development process of countries without reference to their trading performance. (UNECA, 2007:1)

Africa’s integration into the global economy was seen as a central objective for the continent. While increased trade, investment, and economic growth is not the only answer to Africa’s development challenge, it is an indispensable part of the solution if countries are to generate the resources, they need to raise living standards, reduce poverty, and advance their social priorities. The recent economic success of key African countries – many of which have been growing by over 6% in the last decade – has shown the importance of putting outward-oriented trade and investment policies at the centre of national development strategies. The small size of national and even sub-regional markets makes African countries particularly dependent on international trade for economic growth. The growing openness and interconnection of the global economy – and the intensify cation of global competition – has created additional pressure to strengthen country competitiveness and increase scale economies though regional integration. The successful conclusion of the Doha Round – with development as a central pillar – was seen as critical to opening up new trade opportunities in Africa and abroad. (UNECA, 2007:1)

But while trade opening is indispensable to Africa’s development, it is not sufficient. Globalized production networks, expanded supply chains, just-in-time delivery models, and rising international standards place a new premium on strengthening supply-side capacity, reducing trade “costs”, and improving connectivity to markets, as well as liberalizing trade. The point was made that while Africa’s fi rms can be internationally competitive, Africa’s economic systems often are not, making it harder to export reliably, efficiently, and competitively into global markets.

Adverse geography is often compounded by fragmented infrastructure, inefficient institutions, over regulation, unreliable supply chains, and a weak services sector. Studies have shown that these “internal barriers” are more significant obstacles to export growth in Africa than “external barriers”, such as tariffs. It was clear that African countries need access to the modern “trade infrastructure” that increasingly drives globalization: transport corridors and information systems to connect exporters to world markets; modern customs facilities to move products rapidly and efficiently across borders; testing labs to ensure that exports meet international standards; financial “safety nets” to ease concerns about economic adjustment; and the expertise and institutions needed to manage a complex global trading system. Just as important is the need to ensure that individual capacity-building projects form parts of an integrated, comprehensive strategy. Improvements to infrastructure, communications, and regulations need to be properly coordinated and sequenced, to maximize synergies and to ensure that advances in one area are not cancelled by bottlenecks in another. (UNECA, 2007:1)

Regional approaches are particularly important in the African context given the geographic and structural barriers that exporters have to overcome – i.e., the impact of transport infrastructure improvements in Rwanda hinge on improvements across East Africa as a whole. The challenge is to link multilateral, regional, and bilateral trade opening initiatives with comprehensive trade capacity-building strategies, using Aid for Trade as a catalyst. It was also clear that political leadership – and a long-term commitment to export-led growth – is essential to making this happen. Harnessing globalization for development ultimately depends on African countries themselves. Trade needs to be a central pillar of economic and development planning, which in turn requires setting out national goals, establishing priorities, and ensuring that these goals and priorities are mainstreamed across government (especially trade and finance ministries), as well as society as a whole. Because of the cross-border nature of infrastructure and trade facilitation needs, these strategies increasingly need to be regional in scope, requiring close cooperation among neighboring economies. (UNECA, 2007:2)

Assistance with adjustment costs, especially the loss of fiscal revenue from tariff liberalization, is also important if regional and multilateral trade liberalization is to advance. Another broad objective is the creation of a more “business friendly” environment in West and Central Africa, including through the development of national and regional competition policies, legal and regulatory reform, conformity with standards, increased trade financing, and better trade and investment promotion. In this regard, participants highlighted the fundamental need for an open and sustained dialogue between governments and the private sector. Assisting countries and sub-regions to move trade to the centre of their development strategies is an over-arching objective. Although the Enhanced Integrated Framework (EIF) provide an important tool for identifying and mainstreaming trade capacity priorities for most (but not all) LDCs in the region, a comparable mechanism is needed urgently for non-LDCs, especially as they are often lead trade actors in the region. The need for national and regional Aid-for-Trade committees – to help defi ne priorities, develop implementation plans, enhance donor cooperation, and provide a consultative framework for public private partnerships – was also highlighted. Of particular importance, is the need to adequately support and finance the RECs, which provided crucial vehicles for operationalizing regional integration plans. Given that strong institutions are a prerequisite to developing and implementing effective trade strategies, human and institutional capacity building assistance should be “fast-tracked” by donors.  (UNECA, 2007:2)

The public authorities have fixed as a goal making Cameroon an emerging economy by 2035. “Vision 2035”, and the GESP of 2009, which is its medium-term operational framework, give trade an important role and consider it to be a powerful catalyst for creating wealth and promoting development.23 At the internal level, the Government’s objectives for boosting trade consist of ensuring regular supplies in the domestic market under healthy conditions of competition and, at the international level, seeking new markets for Cameroon’s goods) and services, particularly those with high value added. The Government’s trade policy objectives also include African trade integration, mainly with Nigeria and within the Economic Community of Central African States (ECCAS). The authorities realize that the problems currently inherent in Cameroon’s trade regulations (Chapter 3), which explain its poor Doing Business ranking in the case of cross-border trade, hinder the achievement of these objectives. (Cameroon government 2009)

During the period 2006-2012, Cameroon continued to benefit from the technical assistance and training furnished by the WTO. The Organization has spent around Sw.fr 1.13 million (not including the salaries of the WTO staff involved), mainly for travel and accommodation costs for the persons designated by the Government of Cameroon for training in the various topics dealt with by the WTO. In all, 135 persons took part in 97 activities, an average of 20 each year. The estimates of the annual amounts spent for this purpose ranged from Sw.fr 90,000 to Sw.fr 300,000.

Cameroon’s participation in the activities organized by the WTO remained fairly stable between 2006 and 2010 (20-25 persons each year), but showed a marked decline in 2011 (8 persons) and 2012 (12 participants). Furthermore, during this period, Cameroon was invited to some 60 activities but did not take part.

In all, 14.4% of these 97 activities (national or regional), involving 19% of the total number of participants, were held in Cameroon, at a cost of Sw.fr 123,000 (11% of total technical assistance to Cameroon over the period). As a developing country, Cameroon benefits in principle and at its request from two national activities annually financed by the WTO in connection with building human and institutional capacity. These activities are in the form of national seminars, workshops or missions in order to meet with the authorities, for example, in relation to preparation of the TPR. Each year, in all, more than two activities (national or regional) are held in Cameroon under WTO auspices. (UNECA, 2007:1)

Other activities (those outside Cameroon) in which Cameroon’s representatives took part were held either in other African countries (43% of the activities, half of the participants and half of the cost) or in Geneva (43% of the activities, one third of the participants and 40% of the cost). In the case of the latter, two Cameroonian officials attended a ten-month course within the WTO Secretariat. Five Cameroonian officials followed a trade policy course in Geneva, while five others attended such courses in Cotonou or Rabat. (UNECA, 2007:1)

1.2          Statement of Problem

Understandings of the relationships between international trade and poverty reduction have changed considerably over time, and at any given time have been influenced by ideological predispositions and to some extent intellectual discipline.

Africa is still marginalised in the global context, as reflected in the global trend towards bilateral free trade agreements. Although numerous regional agreements exist within Africa, the continent remains outside the major global developments. trade liberalization can reduce the poverty probability and promote the income growth. Trade liberalization increases the income of poor residents and reduces poverty through transmission mechanisms such as promoting economic growth and financial expenditure. It is expected that trade liberalization within the CEMAC zone should reduce poverty in Cameroon as it has done in Nigeria that found in the ECOWAS. It is due to this reason that the researcher wants to understands why the poverty level of Cameroon is still high disputes the liberalization of trade

From the forgoing, the following research questions were derived:

1. What are the positive and negative effects of trade liberalization on poverty reduction in Cameroon?
2. To what extent have trade liberalisation contributed to development of Cameroon home industries?

3 What are the challenges faced by Cameroon to effectively reduce?

1.3          Objectives of the Study

• to examine the positive and negative effects of trade liberalization on poverty reduction in Cameroon?
• To investigate the extent to which trade liberalisation contributed to development of Cameroon home industries

3 to evaluate the challenges faced by Cameroon to effectively reduce?

1.4. Hypotheses of the Study

• The trade liberalisation has not significantly contributed to poverty reduction in Cameroon policy toward
• Trade liberalization has not significantly contributed toward the development of Cameroon home industries
• The Cameroon government has faced insecurity challenges in carrying out trade in Cameroon