External Debt, Public Investment and Economic Growth in Cameroon

Abstract

This study investigates the extent to which external debt and public investment contribute to economic growth in Cameroon-emphasizing how public investment modulates the effect of external debt on economic growth. Time series data spanning the period 1980-2021 obtained from the World Bank’s world development indicators were used, together with the Dynamic Ordinary Least Squares (OLS) approach to ascertain the nature of the long-run relationship between external debt, public investment, and economic growth in Cameroon. Consistent with the debt-overhang and crowding-out literature, the study reveals a negative significant influence of external debt on economic growth in Cameroon. Results also reveal that there is a positive and significant direct effect of public investment on economic growth in the long run. Further results indicate that public investment and external debt positively and significantly affect engender economic growth in Cameroon. This is evidence that public investment modulates the effect of external debt on economic growth in Cameroon. These findings suggest the need for the government of Cameroon to create an enabling environment for private sector investment while accompanying external debt resources with domestic revenue mobilization by broadening the tax base to include taxes on landed property.

Boosting Homeownership Affordability for Low-Income Communities in Indonesia

“…This can be done by subsidizing bank interest rates, so that they are stable. This is in line with studies [44][45][46][70][71][72] shows that inflation affects the purchasing power of low-income people.…”

“…If inflation occurs, there will be an increase in the cost of producing goods, which will affect the investment climate and investment. This is in line with studies [44][45][46][70][71][72] shows that inflation affects the need to own a house.…”

“…The house's inhabitants get the first impression of their life in this world. The house must guarantee the interests of the family, that is, to growth, give the possibility to live in association with its neighbors, and more than that; the house must give tranquility, pleasure, happiness, and comfort to all events of its life [41][42][43][44][45][46]. The ability to purchase power can be summed up as the capacity of consumers to buy the number of goods requested in a market with a price level at a certain income and in a certain period.…”

“…The size of a very simple house has been regulated in the Regulation of the State Minister for Public Housing Number 07/PERMEN/M/2008. Result of studies [15,44,45,48,[65][66][67] shows that subsidized house prices affect the purchasing power of low-income people through the need to own a house as an intervening variable. Therefore, Tenth hypothesis: H0: The price of subsidized housing does not affect the purchasing power of low-income people through the need to own a house as an intervening variable, and H1: The price of subsidized housing affects the purchasing power of low-income people through the need to own a house as an intervening variable.…”