Domestic Demand and Export Performance in CEMAC: The Reverse Causation

Problem: More generally when studying exports dynamics, we adopt the causation from domestic demand to exports. While when the increasing level of exports is coming from another source than domestic demand, for example from productivity level this means self-increasing in the exports level so that it becomes relevant to know the reverse causation from exports to domestic demand. This is belief of this study. The main purpose is then to present this issue as an industrialization strategy. Method: In fact, as an additional issue that was raised in the previous literature is the hypothesis that a high product concentration of exports will reduce the trade-off between sales to domestic and foreign markets (i.e. between domestic demand and exports), to present the reverse causation as an industrialization strategy we bring the evidence that there is a trade-off again between sales to domestic and foreign markets with the reverse causation. That means the country industrializes when the level of his exports grew. We adopt a dynamic panel data model with an error correction mechanism for the six economies in the CEMAC area between 1974 and 2021. Main findings: Following our results the exports dynamics in CEMAC impacts effectively negatively domestic demand with a negative elasticity of around 45% on the exports market share equations and 13% on the product concentration of export equation. Policy implications: The country industrializes when his exports grew.