A Firm's-Eye View of Commercial Policy and Fiscal Reforms in Cameroon

A Firm's-Eye View of Commercial Policy and Fiscal Reforms in Cameroon

After decades of high trade restrictions, fiscal distortions, and currency overvaluation, Cameroon implemented important commercial and fiscal policy reforms in 1994. Almost simultaneously, a major devaluation cut the international price of...

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Bibliographic Details
Main Authors:	Gauthier, Bernard, Soloaga, Isidro, Tybout, James
Format:	Journal Article
Language:	English en_US
Published:	Washington, DC: World Bank 2014
Subjects:	ADDED TAX ADDED TAXES ADVERTISING ARBITRAGE ARREARS AVERAGE COSTS BANKING SECTOR COMMERCE COMMERCIAL POLICY COMMODITIES COMMODITY COMMODITY PRICES COMMON LAW COMPANY TAX COMPARATIVE ADVANTAGE CORPORATE CHARTERS COST INCREASE COST INCREASES COST REDUCTIONS CURRENCY CUSTOMS UNION DEFLATORS DEVALUATION DEVALUATIONS DIVIDEND DIVIDEND INCOME DIVIDENDS DOMESTIC CURRENCY ECONOMIC INTEGRATION ECONOMIC REFORM ECONOMIC RESEARCH ELASTICITY ELASTICITY OF SUBSTITUTION EQUIPMENT EXCHANGE RATE EXCHANGE RATE REGIME EXCISE TAXES EXPENDITURE EXPENDITURES EXPORT MARKETS EXPORT TAX EXPORTER EXPORTERS EXPORTS EXTERNAL TRADE FINANCE CORPORATION FISCAL DEFICITS FISCAL POLICY FOREIGN CAPITAL FOREIGN INVESTMENT FOREIGN MARKETS FOREIGN TRADE FREE TRADE GROWTH RATES IMPLICIT SUBSIDIES INCENTIVE STRUCTURE INCOME INCOME TAX INCOME TAXES INDIVIDUAL FIRMS INDUSTRIAL COUNTRIES INDUSTRIALIZATION INEFFICIENCY INPUT PRICES INSURANCE INTERMEDIATE GOODS INTERNATIONAL BANK INTERNATIONAL BUSINESS INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL TRADE LIBERALIZATION LOCAL GOVERNMENTS MARGINAL TAX RATES MARKET ORIENTATION MICRO-DATA OIL PRICES OUTPUT OUTPUTS OVERVALUATION PER CAPITA INCOME POLITICAL ECONOMY PREFERENTIAL ACCESS PRICE COMPARISONS PRICE EFFECT PRODUCER PRICES PRODUCT DIFFERENTIATION PRODUCT MARKETS PRODUCTION COSTS PRODUCTIVITY PRODUCTIVITY GROWTH PROFIT MARGIN PROFIT MARGINS RATE OF GROWTH REGISTRATION FEE REGISTRATION FEES REINVESTMENT RETURNS RETURNS TO SCALE SALES SALES TAX SALES TAXES SECURITIES SHAREHOLDERS SPREAD STAMP DUTIES SUBSTITUTE SUBSTITUTION SUPPLIERS SURTAX TAX TAX BURDENS TAX CODE TAX CONCESSIONS TAX CREDITS TAX EXEMPTIONS TAX FREE TAX OBLIGATIONS TAX POLICY TAX RATE TAX RATES TAX REFORM TAX REFORMS TAX REGIME TAX REVENUES TAX STRUCTURE TAX SYSTEM TAXATION TOTAL COSTS TOTAL SALES TRADE LIBERALIZATION TRADE REFORMS TRADE UNION TRANSACTION TRANSACTION COSTS TREATY TURNOVER TURNOVER TAX TURNOVER TAXES VALUE ADDED VALUE OF OUTPUT WAGES
Online Access:	http://documents.worldbank.org/curated/en/2002/09/17742200/firms-eye-view-commercial-policy-fiscal-reforms-cameroon http://hdl.handle.net/10986/17207

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Summary:	After decades of high trade restrictions, fiscal distortions, and currency overvaluation, Cameroon implemented important commercial and fiscal policy reforms in 1994. Almost simultaneously, a major devaluation cut the international price of Cameroon's currency in half. This article examines the effects of those reforms on the incentive structure faced by manufacturing firms. Did the reforms create a coherent new set of signals? Did they reduce dispersion in tax burdens? Was the net effect to stimulate the production of tradable goods? The results of applying a cost function decomposition to detailed firm-level panel data suggest that the reforms created clear new signals for manufacturers, as effective protection rates fell by 80 to 120 percentage points. In contrast, neither the tax reforms nor the devaluation had a major systematic effect on profit margins. The devaluation did shift relative prices dramatically in favor of exportable goods, causing exporters to grow relatively rapidly.

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