Global Journal of Human Social Science, E: Economics, Volume 22 Issue 2

in Cameroon, and it is helpful to pay attention to the country's organization and management, such as the quality of its institutions, as presented by Rodrik (2018) following thepioneering analysis of North (1990). These researchers put institutions at the center of economic analysis, claiming that, bad institutions are to blame for a country's economic stagnation. Institutional analysts' theoretical conclusions found a helpful application in particular empirical work done in Cameroon, which showed institutions as an explanatory factor for specific variables of the country's economic environment. Institutions are thus emphasized as a significant driver of innovation (Eloundou, 2014) or as a determinant in the attraction of Foreign Direct Investment (FDI) (Djaowé et Bouba, 2018). Following this, we provide an institutional explanation for the rising rate of inflation and Cameroon's failure to meet its growth targets as outlined in the DSCE. Rather than using existing methodologies, we develop a composite proxy that groups the variables of the institutional system to achieve our purpose more effectively. Following that, we build econometric models based on this proxy that explain inflation and growth rate by institutions in order to develop a diagnosis that will allow us to propose accurate and efficient institutional regulations. These regulations will be capable of controlling the galloping evolution of prices and bringing the country firmly towards the path of an emerging nation. II. T heoretical F ramework of the A nalysis a) Effect of institutions on wealth formation The link between institutions and wealth production is a trend that North (1990) haspopularized. Since then, the area of institutional economics has grown significantly, with a diverse spectrum of perspectives. The significantity of ideas on the relationship between institutions and growth have been established to determine how institutions affects economic growth. There are many points of view, and presenting them all would be pretentious; instead, we show the most essential ones. i. The Evolutionary Approach The evolutionary approach is a relatively new theoretical approach to institutions that has revolutionized the economic approach to them. It was created in opposition to the functionalist approach, which focuses on the economic functions of institutions. The functionalist view posits that institutions improve economic performance by performing specific functions such as lowering transaction costs, coordinating markets, and reducing market fraud (Coase, 1937; Demsetz, 1957). Institutions are treated as a static fact in this perspective, and their roles in the economy are the only thing that matters. For evolutionary analysts, this constraint is the beginning point. Institutions evolve according to this paradigm, and it is this evolution that defines a country's economic performance. According to Acémoglu et al. (2006), institutional transformation is influenced by the country's economic development. Thus, the wealthier a country becomes, the better its institutions become, which has a positive impact on growth. According to Amable et Palombarini (2005), institutionaltransformation is fuelled by social conflict. Low growth rates, high prices, and high unemployment encourage political conflicts, which lead to the formation of new institutions: institutions are thus viewed as a tool for maintaining political equilibrium. Although institutions are changing, it is essential to remember that they are not universal, as they do not yield the sameaffects in various economies (Lechevalier, 2012; Piketti, 2015). A method based on learning effect, on the other hand, is being developed. Economic performance, according to this viewpoint, is a product of institutional change, which is achieved through trial and error. Past policies decisions that lead to wrong results have led to a re- evaluation of these decisions and the introduction of new economic regulations that are better than the old ones (Lechevalier, 2011). ii. The Cultural Approach Cultural differences or ideological convictions, according to proponents of the cultural approach to institutional analysis, would explain differences in economic growth between countries. Because of their differences in conceptions of “good social values”, societies chose different economic systems. Not all societies would have the same view of what is beneficial fortheir people. This discrepancy is exacerbated by the uncertainty surrounding ex-ante knowledge of good institutions. Countries that prosper are those whose leaders' institutional choices prove to be correct ex-post, that is, those where the discrepancy between the institutions selected and those that maximize aggregate income is modest. Countries where political leaders get it wrong ex-post, on the other hand, tend to stagnate. The cultural approach, like the economic approach, indicates that there are factors at work that prevent countries from selecting institutions that are widely acknowledged to be inefficient for society as a whole (Acemoglu et al., 2005). iii. The Historical Approach The historical approach considers institutional quality as a result of historical events. In other words, historical events shape the nature of institutions at a certain point in time, and theseinstitutions persist across time by creating various effects. Several economists, sociologists, and political scientists have this ideological viewpoint. Authors such as La Porta et al. (1998, 1999), Djankov et al. (2003) have emphasized the impact of the legal origin of the Volume XXII Issue II Version I 30 ( ) Global Journal of Human Social Science - Year 2022 © 2022 Global Journals E Institutional Analysis of the Determinants of Economic Non-Take-Off and High Living Standards in Cameroon between 1990 and 2019