The Impact of Foreign Debt on GDP growth (Cameroon)
A Thesis in partial fulfillment of an MBA in Comparative Institution Design for Transition Economy and Business Management
Ritsumeikan Asia Pacific University By AKUM Gawum Joseph 52109602 Supervised by Professor Suzuki Yasushi
Dedication This is dedicated to my family
This is to declare that I, AKUM Gawum Joseph, am submitting this piece of work, under the supervision of Professor Suzuki Yasushi, to the Graduate School of Management of Ritsumeikan Asia Pacific University in partial fulfillment of the requirements for a Masters degree in Business Administration. I hereby declare that this research paper has not been earlier on submitted, and that all data from other sources has been duly acknowledged.
AKUM Gawum Joseph
Signature 15th July 2011
This is to certify that this research was performed by AKUM Gawum Joseph under the supervision of Professor Suzuki Yasushi in partial fulfillment of the requirements for a Masters of Business Administration, specializing in Comparative Institution Design for Transition Economy and Business Management. This work has not until now been submitted or published.
At the end of this research, I feel the deep need to express my heartfelt gratitude to my Sensei, Professor Suzuki Yasushi whose guidance and correction served as a source of direction and motivation. Also, to the interim review committee: Professor Kayhan Tajeddini and Professor Ken Suzuki, I am ever so grateful for their constructive criticism. I would like to thank the members of the CID seminar for their inputs which contributed to my point of focus.
I would like to thank Doctor Nair, and all the other lecturers in APU who, through their insight contributed to the ideas which made this work possible. It would be unfair to go without expressing my gratitude to the APU administration and management who do not cease to provide the student community with a wide range of facilities to guide and support research.
Finally, I would like to thank the Japanese Government for the support provided through the MEXT scholarship program, without which this study, as well as the last two years of study would not have been possible. I am deeply grateful to all the members of the MBA Fall 2011 graduating class for the growth enhancing atmosphere they created as we all engaged in this exchange through which we learnt from each other.
The important role of institutions is hereby evoked by studying the relationship between Cameroon’s foreign debt and its GDP growth. This study observes that it could be misleading to set foreign debt management targets on a strictly quantitative basis, considering the diversity of debtors and their needs. A conceptual framework using the circular flow of resources within the economy is used to qualitatively analyze the areas where the flow is subjected to frictions due to institutional inefficiency. The country’s readiness to convert its foreign debts to gross capital formation, thus stimulating consumption, and earning fiscal revenues is studied. Through this, the depth of changes initiated by foreign debt management programs is assessed. The changes resulting from these programs, especially the latest one, (HIPC initiative) are observed to evaluate how these programs have affected decision making within the economy. It examines the degree to which the country’s long term immunity to a future foreign debt has been enhanced, and also, the chances that the economy can internally stimulate its future GDP growth without tuning to foreign debt. It concludes that the efficiency of domestic institutions as well as its major creditors has a significant impact on debt sustainability. Therefore, the HIPC’ initiative’s failure to adequately address institutional weaknesses in the economy, only paves the way for a future debt crisis.
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