Fiscal policy, labour productivity growth and convergence between agriculture and manufacturing: Implications for poverty reduction in Cameroon

Abstract

This paper examines the factors that drive labour productivity convergence between agriculture and manufacturing activities in Cameroon over 1969-2005. It is supposed that whenever one sector grows in terms of labour productivity it will also bring benefit to other industries. For instance, agriculture plays a significant role in reducing poverty. The bulk of the poor are engaged in agriculture and so an increase in agricultural productivity has a significant potential for reducing such poverty. Our findings indicate that while government spending on education, health, and road infrastructures promotes convergence, agricultural spending reinforces inequality in sectoral labour productivity by disproportionately increasing non-agricultural sector productivity. Furthermore, increases in manufacturing and service productivity levels both have a positive impact on agricultural productivity in the long-run, with manufacturing equally contributing in the short-run.