What is trade openness, and how does it relate to Cameroon's economy?

Trade openness, in the context of Cameroon, refers to the extent to which the country participates in international trade. It's gauged by the ratio of total imports and exports to Cameroon's GDP. The government has pursued trade liberalization to stimulate private sector development, boost competitiveness, and attract foreign investment. However, its impact on Cameroon's manufacturing sector has been mixed due to factors like import dependence and structural issues. This suggests that while trade openness is intended to benefit the economy, its effectiveness is hindered by underlying challenges within the manufacturing sector.

What are some of the main obstacles preventing Cameroon's manufacturing sector from fully benefiting from trade openness?

Several challenges hinder Cameroon's manufacturing sector despite trade openness. One major issue is the continued high dependence on imported inputs, including food products and raw materials. Additionally, the inadequate domestic production capacity means local manufacturers often struggle to meet even local demand, limiting opportunities for export-oriented growth. Structural problems like high unit costs, limited access to finance, smuggling, unfair competition, high tax rates, and governance issues also significantly undermine the sector's competitiveness.

How does Cameroon's reliance on primary product exports impact its industrial growth?

Cameroon's economy is heavily reliant on primary product exports like aluminum, rubber, banana, wood, cocoa, coffee, and cotton. This dependence makes the country vulnerable to price volatility and external shocks in global markets. It also restricts the potential for value-added manufacturing and economic diversification. Focusing on these primary exports rather than developing secondary industries hinders long-term industrial growth, which requires more complex and resilient economic structures.

What does a supply-side economic strategy entail for Cameroon, and why is it important for its industrial future?

A supply-side economic strategy for Cameroon involves prioritizing policies that boost domestic production, enhance competitiveness, and promote economic diversification. This approach focuses on strengthening the internal capabilities of Cameroonian manufacturers so they can compete effectively in the global marketplace. By addressing structural issues and improving domestic capacity, Cameroon can unlock the full potential of its industrial sector. This is in contrast to relying solely on trade openness, which, without these internal improvements, can leave local industries vulnerable.

Given the challenges faced, what specific steps can Cameroonian authorities take to promote industrial growth beyond simply opening up trade?

Cameroonian authorities should focus on restructuring enterprises and implementing targeted policies to support the manufacturing sector. This includes reducing import dependence by fostering local production of raw materials and capital goods. Addressing structural issues such as high unit costs and limited access to finance through government support and regulatory reforms is crucial. Additionally, promoting diversification into value-added manufacturing and addressing governance issues will create a more favorable environment for industrial growth. These measures, combined with strategic trade policies, can help Cameroon realize its industrial potential.

Cameroon industrial growth through trade.

Cameroon's Economy: Can Trade Openness Unlock Industrial Growth?

Mira Elwood in Business & Economy August 2025 • 4 min read.

"A deep dive into how international trade policies impact manufacturing and economic diversification in Cameroon."

In an increasingly interconnected world, nations strive to carve out paths toward sustainable economic development. A cornerstone of this journey often lies in building a robust industrial sector, capable of driving innovation, creating jobs, and fostering economic resilience. For developing countries, the question isn't just about industrializing, but about how to do it effectively in the face of global competition and evolving trade dynamics.

Cameroon, like many African nations, stands at this crossroads. The country boasts a diverse economy with significant potential, yet its industrial sector lags behind other sectors, contributing less to the Gross Domestic Product (GDP) than desired. This situation raises critical questions about the factors hindering industrial growth and the policies that could unlock its potential.

One of the most debated strategies is trade openness—the extent to which a country embraces international trade through reduced tariffs, streamlined regulations, and open borders. Proponents argue that trade liberalization fosters competition, encourages efficiency, and provides access to global markets, thereby stimulating industrial growth. However, critics contend that it can also expose nascent industries to overwhelming competition, leading to their decline and hindering domestic production.

Trade Openness: A Double-Edged Sword for Cameroon's Manufacturing?

Cameroon industrial growth through trade.

Trade openness, often measured by the ratio of total imports and exports to GDP, is a central element of Cameroon's trade policy. Over the years, the Cameroonian government has implemented various measures to liberalize trade, aiming to promote private sector development, enhance competitiveness, and attract investment. However, the impact of these policies on the manufacturing sector has been complex and, at times, contradictory.

On one hand, trade liberalization can reduce import prices, making raw materials and capital goods more affordable for domestic manufacturers. It can also expose businesses to international competition, pushing them to innovate, improve efficiency, and adopt new technologies. These benefits, in theory, should lead to increased productivity, higher quality products, and greater competitiveness in both domestic and international markets.

However, the reality in Cameroon has been more nuanced. Several factors have blunted the potential benefits of trade openness for the manufacturing sector:

Inability to Reduce Import Dependence: Cameroon's manufacturing sector still relies heavily on imported inputs, including food products and raw materials. Trade liberalization hasn't necessarily reduced this dependence, and in some cases, it may have exacerbated it.
Inadequate Domestic Production Capacity: Cameroonian manufacturers often struggle to meet domestic demand, leaving consumers to rely on imports. This limited production capacity undermines the potential for export-oriented growth.
Structural Challenges: The manufacturing sector faces numerous structural problems, including high unit costs, limited access to finance, smuggling, unfair competition, high tax rates, and governance issues. These challenges diminish the sector's ability to compete effectively in a liberalized trade environment.

Furthermore, Cameroon's trade structure is heavily skewed toward primary products, such as aluminum, rubber, banana, wood, cocoa, coffee, and cotton. These commodities are subject to price volatility and external shocks, making the economy vulnerable to fluctuations in global demand. The reliance on primary exports also limits the potential for value-added manufacturing and diversification, which are essential for long-term industrial growth.

Charting a New Course: Supply-Side Economics for Cameroon's Industrial Future

The study suggests that trade openness, in its current form, may not be the magic bullet for Cameroon's industrial woes. While international trade offers potential benefits, the country's manufacturing sector faces significant challenges that need to be addressed through targeted policies and strategic interventions. Moving forward, Cameroonian authorities should prioritize restructuring enterprises and building a supply-side economic strategy that focuses on boosting domestic production, enhancing competitiveness, and promoting diversification. This approach would empower local manufacturers to thrive in the global marketplace and unlock the full potential of Cameroon's industrial sector.