The paper had as objective to investigate the effect of MNCs on the export intensity and propensity of domestic manufacturing firms in Cameroon and to identify the various channels through which such effects are transmitted. The literature on MNCs and export performance considers the spillover effect of MNCs suggesting that foreign owned firms operating in host countries can be important sources of export spillovers, through information dissemination concerning foreign markets that can be useful to local firms. In addition, the literature has identified various channels through which the effect of spillovers can be transmitted. In this paper, three channels of export are used namely; information externalities, demonstration effects and competition effects. Using firm level data from the World Bank Investment Climate Survey
(ICS) of companies, for the period 2006 and 2009, the simultaneous decision to export and the export propensity decision were estimated using the two stage Heckman selection model.
The findings from this study revealed that foreign firms influence the export decision of domestic firms positively in Cameroon through the demonstration, competition and information channels. The estimated results also revealed that a firm’s decision to export and the proportion exported are influenced by turnover, size and experience. Hence, developing countries like Cameroon which aspire to industrialize and emerge must consider innovative ways which can spur vertical backward linkages between foreign-owned firms and domestic firms. It is also important to put in place policies aimed at promoting foreign direct investment in the country that are complementary and will encourage technological transfer and promote information dissemination. There is therefore dire need to encourage the current socio-economic and political stability existing in the country and to foster and improve the climate of doing business by both foreigners and nationals.
Faculty of Economic Ahmadu Bello University, Zaria