Technical efficiency and manufacturing export performance in Cameroon: a firm level analysis

This dissertation addresses the following related issues: efficiency of manufacturing firms, determinants of technical efficiency of Cameroonian manufacturing firms. It further investigates the relationship between technical efficiency and export performance while exploring the determinants of export performance as well. The study employs Stochastic Frontier Analysis (SFA) to study the technical efficiency of the manufacturing firms and Probit and Tobit models to examine the determinants of export performance of firms. The main finding of the study is that most manufacturing firms in Cameroon were technically inefficient. The most efficient firms are from the food processing sector, followed by wood and furniture. Firms with 5 to 20 years of operation experience in Cameroon were found to be more efficient. With regards to the determinants of manufacturing export performance, the Probit and Tobit models of manufacturing export performance are estimated. The results show that higher level of efficiency, firm size, foreign ownership, lower tax rates, producing in the industrial zone, and being in the food processing and textile sectors are the major determinants of propensity to export and decision to export or not. The policy recommendation is that, there is still room for technical efficiency improvements with existing firm technologies. In the near future, however, new technologies must be introduced to sustain higher efficiency levels and reduce related production costs. More so, in order to promote efficiency and export performance, polices should be designed at attracting FDIs more especially in the food processing and textile sectors. The government should as well design strategies to provide incentives, credit to small and medium sized firms in order to increase output.