Currency Devaluation and Resource Mobilization : A CGE Analysis of Adjustment in Cameroon

Currency devaluations prescribed for many developing countries are usually expected to generate a growth-stimulating reallocation of resources in favor of export production. Results from a computable general equilibrium model of devaluation in Cameroon indicate aggregate growth in export agriculture with decline in some traditional export crops and expansion in specific non-tradable food crops. While agriculture and manufacturing expand after devaluation, reduced output from services and construction causes short-term contraction in aggregate output. Positive growth and trade balance effects are dependent on a major reallocation of labor which has been difficult to achieve in Cameroon