The Effects of Trade Liberalization on Productive Efficiency : Some Evidence from the Electrical Industry in Cameroon

"This study assesses the impact of trade liberalization in the Union Douaniere des Etats de l'Afrique Centrale (UDEAC) on the productive efficiency of the electrical plants in Cameroon. Essential elements of the liberalization package may be summarized as follows: gains are expected from greater trade and freer trade because of allocative improvements (shifting resources to where they can be most productive according to a country's comparative advantage), gains in x-efficiency (because freer trade means more competition, which promotes efficiency) an increased access to productive inputs and information (capital inflow raises the total capital stock and there are greater technological transfers, greater imports of capital goods and greater inflow of ideas resulting from greater overall contact). Therefore trade reform is important as a means of improving the efficiency with which resources are allocated and hence the wastfulness of domestic firms and encouraging competition."