particularly for firms that rely mostly on imported inputs, output growth was often negative, with
the fall in size being associated with a decline in productivity. On the basis of these evidences,
there are grounds to suspect that the adjustment process may have aggravated the dualism
between large exporters and relatively small firms that cater mainly to the domestic markets and
are unable (or unwilling) to shift toward foreign markets.
An additional finding is that there was virtually no entry of new firms in the export sector
following devaluation and trade reforms. This result is consistent with an earlier study on exports
on Cameroon (Tybout et al., 1997).
The article is organized as follows. Section 2 provides an overview of the major shocks
and the policy reforms implemented in both countries. In section 3, we use detailed survey data
spanning the 1993-96 period, to quantify how the shocks affected relative costs. Section 4
documents and interprets enterprise reaction to the new incentives in terms of resources
reallocation, looking at changes in output, productivity and export performance. Section 5
concludes.
2. The Roots of the Crisis and Policy Responses
During the eighties and up to the early 1990s, economic performances in Chad and
Gabon have been largely unsatisfactory. GDP has been virtually stagnant in Chad and highly
vulnerable to the gyrations of oil prices in Gabon. Even after the exploitation of a new and very
large oil field, Gabon’s growth stagnated at around 2% in the early 1990s. Production of major
export crops such as cotton in Chad and timber in Gabon declined steadily and the resource
balance was close to minus 20% of GDP for Chad and only mildly positive for Gabon. In the
latter case, furthermore, government revenues were being eroded as oil exports fell and tax
exemptions and evasion became more pervasive.