This paper analyzes the impact of oil revenues on the agriculture-based economy of Cameroon, a significant (100,000 barrels per day) but temporary (20 years' of reserves) oil producer. It has been observed in other oil exporting countries that when oil revenues are spent domestically, an appreciation of the real exchange results, leading to a shift in the production mix away from tradable sectors in favor of nontradables. Using a multisectoral, general equilibrium model, we show that while this effect occurs in the aggregate, some tradable sectors actually expand. In particular, some import-substituting industries, because they produce output which is only imperfectly substitutables with foreign goods, undergo an increase in demand despite the real exchange rate appreciation. The traditional export sectors - cocoa and coffee - do suffer, however, as a result of their decline in international competitiveness. Moreover, while real wages increase throughout the economy, the gap between rural and urban wages widens. Finally, efforts to protect the tradable sectors with tariffs have little effect on reversing the structural change induced by oil revenues.
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