Gauthier, BernardSoloaga, IsidroTybout, James2014-03-042014-03-042002-09World Bank Economic Reviewhttps://hdl.handle.net/10986/17207After decades of high trade restrictions, fiscal distortions, and currency overvaluation, Cameroon implemented important commercial and fiscal policy reforms in 1994. Almost simultaneously, a major devaluation cut the international price of Cameroon's currency in half. This article examines the effects of those reforms on the incentive structure faced by manufacturing firms. Did the reforms create a coherent new set of signals? Did they reduce dispersion in tax burdens? Was the net effect to stimulate the production of tradable goods? The results of applying a cost function decomposition to detailed firm-level panel data suggest that the reforms created clear new signals for manufacturers, as effective protection rates fell by 80 to 120 percentage points. In contrast, neither the tax reforms nor the devaluation had a major systematic effect on profit margins. The devaluation did shift relative prices dramatically in favor of exportable goods, causing exporters to grow relatively rapidly.en-USCC BY-NC-ND 3.0 IGOADDED TAXADDED TAXESADVERTISINGARBITRAGEARREARSAVERAGE COSTSBANKING SECTORCOMMERCECOMMERCIAL POLICYCOMMODITIESCOMMODITYCOMMODITY PRICESCOMMON LAWCOMPANY TAXCOMPARATIVE ADVANTAGECORPORATE CHARTERSCOST INCREASECOST INCREASESCOST REDUCTIONSCURRENCYCUSTOMS UNIONDEFLATORSDEVALUATIONDEVALUATIONSDIVIDENDDIVIDEND INCOMEDIVIDENDSDOMESTIC CURRENCYECONOMIC INTEGRATIONECONOMIC REFORMECONOMIC RESEARCHELASTICITYELASTICITY OF SUBSTITUTIONEQUIPMENTEXCHANGE RATEEXCHANGE RATE REGIMEEXCISE TAXESEXPENDITUREEXPENDITURESEXPORT MARKETSEXPORT TAXEXPORTEREXPORTERSEXPORTSEXTERNAL TRADEFINANCE CORPORATIONFISCAL DEFICITSFISCAL POLICYFOREIGN CAPITALFOREIGN INVESTMENTFOREIGN MARKETSFOREIGN TRADEFREE TRADEGROWTH RATESIMPLICIT SUBSIDIESINCENTIVE STRUCTUREINCOMEINCOME TAXINCOME TAXESINDIVIDUAL FIRMSINDUSTRIAL COUNTRIESINDUSTRIALIZATIONINEFFICIENCYINPUT PRICESINSURANCEINTERMEDIATE GOODSINTERNATIONAL BANKINTERNATIONAL BUSINESSINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINTERNATIONAL FINANCEINTERNATIONAL TRADELIBERALIZATIONLOCAL GOVERNMENTSMARGINAL TAX RATESMARKET ORIENTATIONMICRO-DATAOIL PRICESOUTPUTOUTPUTSOVERVALUATIONPER CAPITA INCOMEPOLITICAL ECONOMYPREFERENTIAL ACCESSPRICE COMPARISONSPRICE EFFECTPRODUCER PRICESPRODUCT DIFFERENTIATIONPRODUCT MARKETSPRODUCTION COSTSPRODUCTIVITYPRODUCTIVITY GROWTHPROFIT MARGINPROFIT MARGINSRATE OF GROWTHREGISTRATION FEEREGISTRATION FEESREINVESTMENTRETURNSRETURNS TO SCALESALESSALES TAXSALES TAXESSECURITIESSHAREHOLDERSSPREADSTAMP DUTIESSUBSTITUTESUBSTITUTIONSUPPLIERSSURTAXTAXTAX BURDENSTAX CODETAX CONCESSIONSTAX CREDITSTAX EXEMPTIONSTAX FREETAX OBLIGATIONSTAX POLICYTAX RATETAX RATESTAX REFORMTAX REFORMSTAX REGIMETAX REVENUESTAX STRUCTURETAX SYSTEMTAXATIONTOTAL COSTSTOTAL SALESTRADE LIBERALIZATIONTRADE REFORMSTRADE UNIONTRANSACTIONTRANSACTION COSTSTREATYTURNOVERTURNOVER TAXTURNOVER TAXESVALUE ADDEDVALUE OF OUTPUTWAGESJournal ArticleWorld Bank10.1596/17207