1. A Firm's-Eye View of Commercial Policy and Fiscal Reforms in Cameroon
- Author
-
Isidro Soloaga, Bernard Gauthier, and James Tybout
- Subjects
FOREIGN TRADE ,TRADE LIBERALIZATION ,RETURNS TO SCALE ,TAX RATES ,TAX EXEMPTIONS ,GROWTH RATES ,TAX ,CUSTOMS UNION ,VALUE ADDED ,DIVIDEND INCOME ,MARGINAL TAX RATES ,COMMODITIES ,SHAREHOLDERS ,COST INCREASES ,ELASTICITY OF SUBSTITUTION ,FINANCE CORPORATION ,TAX CREDITS ,PRICE EFFECT ,COMMODITY ,TRANSACTION COSTS ,Economics ,EXPORT MARKETS ,SUBSTITUTE ,SALES TAXES ,INCOME ,INPUT PRICES ,ADVERTISING ,PRODUCTIVITY ,DOMESTIC CURRENCY ,REGISTRATION FEES ,SUBSTITUTION ,TURNOVER TAXES ,RETURNS ,PRODUCTION COSTS ,TAX REFORMS ,PER CAPITA INCOME ,INCENTIVE STRUCTURE ,ADDED TAX ,AVERAGE COSTS ,PRODUCER PRICES ,TREATY ,EXPORT TAX ,COMMERCIAL POLICY ,RATE OF GROWTH ,Macroeconomics ,Devaluation ,REGISTRATION FEE ,Development ,TAX REFORM ,INTERMEDIATE GOODS ,TAX STRUCTURE ,EXPORTERS ,INTERNATIONAL FINANCE ,TAX POLICY ,TOTAL COSTS ,WAGES ,INTERNATIONAL BUSINESS ,TRADE UNION ,INDIVIDUAL FIRMS ,DEFLATORS ,DEVALUATION ,Tax policy ,COMMON LAW ,EXPORTER ,EXCHANGE RATE REGIME ,ELASTICITY ,INDUSTRIALIZATION ,SALES TAX ,INCOME TAXES ,International economics ,FISCAL DEFICITS ,COMPANY TAX ,ARREARS ,Fiscal policy ,BANKING SECTOR ,COST INCREASE ,DIVIDEND ,ADDED TAXES ,EXCISE TAXES ,TRADE REFORMS ,TAX FREE ,CORPORATE CHARTERS ,TAX RATE ,DIVIDENDS ,FREE TRADE ,PRODUCTIVITY GROWTH ,Tax reform ,ECONOMIC INTEGRATION ,MICRO-DATA ,TAX REGIME ,TURNOVER TAX ,TAX OBLIGATIONS ,POLITICAL ECONOMY ,Sales tax ,LIBERALIZATION ,TAXATION ,INTERNATIONAL ECONOMICS ,Lump-sum tax ,INCOME TAX ,EXPORTS ,EXTERNAL TRADE ,FOREIGN MARKETS ,PRODUCT MARKETS ,OUTPUTS ,ARBITRAGE ,INTERNATIONAL DEVELOPMENT ,MARKET ORIENTATION ,INTERNATIONAL TRADE ,OVERVALUATION ,Turnover tax ,PRICE COMPARISONS ,STAMP DUTIES ,LOCAL GOVERNMENTS ,SUPPLIERS ,FISCAL POLICY ,OUTPUT ,OIL PRICES ,ECONOMIC REFORM ,EXCHANGE RATE ,EQUIPMENT ,FOREIGN CAPITAL ,INSURANCE ,TOTAL SALES ,CURRENCY ,PREFERENTIAL ACCESS ,TURNOVER ,SPREAD ,Economics and Econometrics ,INEFFICIENCY ,COMMERCE ,COMMODITY PRICES ,EXPENDITURES ,REINVESTMENT ,TAX REVENUES ,Tax rate ,COST REDUCTIONS ,SECURITIES ,IMPLICIT SUBSIDIES ,INTERNATIONAL BANK ,Accounting ,PROFIT MARGINS ,SALES ,FOREIGN INVESTMENT ,INDUSTRIAL COUNTRIES ,PRODUCT DIFFERENTIATION ,SURTAX ,COMPARATIVE ADVANTAGE ,PROFIT MARGIN ,VALUE OF OUTPUT ,DEVALUATIONS ,ECONOMIC RESEARCH ,TAX BURDENS ,Finance ,EXPENDITURE ,TAX CODE ,TAX CONCESSIONS ,TAX SYSTEM ,TRANSACTION - Abstract
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.
- Published
- 2002