Modeling External-Factors-Led Growth Hypothesis in Cameroon

This study was out to examine the external determinants of economic growth in Cameroon from 1986 to 2019. Studies on external-factors-led growth hypothesis in Cameroon are narrow and limited. This study provides a new intuition into key external factor variables affecting growth. The autoregressive distributive lag (ARDL) bound test and error correction model (ECM) approach were used to answer the research questions. The result revealed that personal remittance, foreign direct investment (FDI), and foreign aid positively and significantly affect economic growth in both the short and long run while the exchange rate negatively and significantly affect economic growth in the short run but positively and significantly impact growth in the long run. The study indicates that external factors can be a great engine of growth if the government initiates proper foreign policies.