informal sector production, which accounts for a sizable share of total production at factor costs and gross value added.

Though rural-to-urban migration remains important and may have contributed to increased supply of urban labor, the rapidly rising scope of informal sector activities, one of the key characteristics of the Cameroonian economy, and the nature of the growth process in the post-devaluation period may also have played a critical role in the structure of the economy of the late 1990s. That period is characterized by continued low investment and rapid depreciation of capital stock, particularly in rural areas, and rising unemployment. Under these conditions, the informal sector need not be viewed as an engine for long-term growth; instead, it should be viewed as a disguised form of unemployment and short-term alternative to a shortage of formal employment, especially given the skill mix of its labor force and its implication for domestic resource mobilization in the short run, and investment in the medium to long-term.

The detailed structure of the financial SAM also allows a further analysis of the structural characteristics of the Cameroonian economy, and particularly intra and inter-sectoral linkages and flows of funds and resources across sectors. While own-sector multipliers appear to be generally high across all the IMMPA-based production sectors, implying that increased investment or additional resources in a given sector are likely to have a greater impact within the sector, inter-sectoral multipliers are highly variable. For instance, while the effects of an injection of additional resources in the public sector are insignificant on the rural traded sector, they tend to be relatively high on informal and urban corporate production. A similar contrast is observed on the other key production sectors, where the relatively strong linkages between informal sector production and rural production (traded and non traded) is worth pointing out. However, factor productivity appears to be very low in rural areas, notwithstanding the relatively high total multiplier linkages. Moreover, in terms of future prospects for growth and industrial production, rural sectors have low forward linkages, while urban corporate production enjoys one of the highest forward linkage indexes.

The simulations highlight the income and growth effects of increased public investment, following hypothetical debt relief and reduction of external debt servicing within the framework of the HIPC initiative, and under fixed-price multipliers. Increased public investment results in a higher level of GDP and household income, almost across all sectors and income groups. However, the financial SAM-based multipliers are based on a number of restrictive assumptions. The most noticeable ones include the hypothesis of excess capacity, which is essential for prices to remain constant. A relaxation of the fixed-prices assumption is likely to impact on the distribution of income and growth across sectors and geographical regions.

The simulations consider an extreme case where the hypothetical relief from the HIPC is entirely reallocated to finance public investment and capital expenditures. In practice and in support of the PRSP process, a mix of recurrent and capital expenditures is a likely feature of growth and poverty reduction strategies. The proposed financial SAM provides the data framework for constructing the IMMPA model for Cameroon. The IMMPA model has a financial CGE-type architecture, with a dynamic and a more flexible structure, and should provide the basis for assessing the growth and income distribution and welfare effects of macroeconomic reforms and increased public spending under differing composition of investment and recurrent expenses. Moving beyond the functional distribution of income, and 29