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Export Performance Under Imperfect Competition: Evidence from Manufacturing Firms in Cameroon

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Abstract

We investigate the effect of domestic market concentration on firm-level export. While the national-champion rationale actually rests on firmer theoretical ground, the empirical literature generally supports the positive effects of domestic rivalry. We employ a dataset of manufacturing Cameroonian firms from 2009 and 2016 and use the probit and Tobit II estimates. We find no direct relationship between concentration and exports. However, we test whether economies of scale (through size), technological constraint (ICT), and foreign participation (FDI) can influence this relationship. The results show that through the adoption of ICT, the internal rivalry effect is operational. In low industrial concentration (in more competitive market), the most digital firms improve their international market share. Robustness tests (2SLS and fractional probit) confirm these results. Government needs to direct their policies towards increased firm digitalization in order to improve their competitiveness in foreign markets. In order to enhance the positive effects of these policies, the policies should be directed towards the least concentrated industries.

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Data Availability

Data sets supporting the results of this study are available upon request from the author.

Notes

  1. See Reinganum (1989), for an excellent survey of the early literature. More recent surveys tackling also competition policies is Shapiro (2012).

  2. ‘Or Arrow effect’.

  3. The data are available and downloadable through the World Bank portal—http://www.enterprisesurveys.org

  4. Surveys were administered using face-to-face interviews with the owner or the manager of the firm.

  5. Some details on the GEC data are available in the National Institute of Statistics (2018).

  6. The instruments used are the average investment per industry and the minimum efficiency scale of the industry. Martin (1979) identified these instruments as barriers to entry, but which do not directly affect export performance. These instruments have been used, among others, by Gupta (1983), Delorme et al. (2002), Setiawan and Effendi (2016), and Fambeu and Etogo (2020).

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Acknowledgements

The author would like to thank the JICT Editor and anonymous referees for their very helpful comments.

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  1. FSEGA, University of Douala, Douala, 4032, Cameroon

    Ariel Herbert Fambeu

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  1. Ariel Herbert Fambeu
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Appendix

Appendix

Table 3 Distribution of manufacturing firms by sub-sector in Cameroon in 2009 and 2016
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Table 4 Summary statistics
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Table 5 Correlation coefficients
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Table 6 Industrial concentration on firm exports in Cameroon (2SLS estimates)
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Table 7 Export concentration and intensity (fractional probit)
Full size table

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Fambeu, A.H. Export Performance Under Imperfect Competition: Evidence from Manufacturing Firms in Cameroon. J Ind Compet Trade 24, 3 (2024). https://doi.org/10.1007/s10842-024-00412-x

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