Harnessing Technological Innovation for Poverty Reduction: Sectoral and Microsimulation Insights from Cameroon and the DRC

This study investigates Cameroon and the Democratic Republic of Congo, both contending with significant technological disparities—defined as variations in capital-augmenting technological capacity across sectors that influence productivity and growth potential. Using data from the year 2015, the analysis employs a dynamic computable general equilibrium (CGE) model combined with a microsimulation approach. The study examines how capital-augmenting technological innovation (TI)-that is, improvements in the efficiency of capital use-affects key macroeconomic variables such as GDP growth, wage rates, consumption patterns, and household welfare. Results from the CGE simulations reveal that increased TI positively influences GDP growth through contributions from agriculture, industry, and transport sectors. Welfare and income effects benefit households engaged in innovative sectors, while investment and consumption responses differ across activities. At the micro level, higher TI reduces poverty rates in both countries, especially within agriculture, industry, and transport. The findings highlight the importance of targeted investments in technology-intensive sectors to maximise TI’s benefits for growth, income distribution, and poverty reduction. Policymakers are encouraged to foster innovation-friendly environments, support entrepreneurship, and promote inclusive growth strategies that enhance labour market outcomes and long-term welfare.