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NIGERIAN JOURNAL OF CONTEMPORARY PUBLIC POLICY

Year: 2015|   Volume No: 11|   ISSN: 0795-0330|   Page No: 12


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Title:  

DO DOMESTIC FIRMS LEARN TO EXPORT FROM MULTINATIONALS? EMPIRICAL EVIDENCE FROM CAMEROON

DOBDINGA FONCHAMNYO CLETUS;

FACULTY OF ECONOMICS AND MANAGEMENT UNIVERSITY OF BAMENDA-CAMEROON  

ABSTRACT

Multinational Corporations (MNCs) have continued to be a major concern to most governments in developing countries due to the numerous benefits they can bring in terms of improved productivity, employment, technological research and development. In this paper, firm level data from the World Bank Investment Climate Survey (ICS) for the period 2006 and 2009 were used to investigate the effect of Multinational Corporations on the export performance of manufacturing firms in Cameroon. The paper specifically examined the channel through which Multinationals influence the export performance of manufacturing firms using the Heckman Two Stage Selection Technique. The empirical results provided evidence that MNCs influence the export performance positively through the demonstration, competition and information channels. The results however showed that the information channel was statistically insignificant in influencing the likelihood to export. The paper therefore recommended that policies aimed at promoting a good business climate such as stable political and macroeconomic environment, improved security should be encouraged to attract more MNCs in an attempt to improve the export performance of domestic firms.

SUMMARY:

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.

Correspondence:

Faculty of Economic Ahmadu Bello University, Zaria


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