A Remittance Dependent Pinoy Economy

[jpdm]

The remittances of OFWs are heralded as the saviour of our economy.

But a study conducted by an economist also shows the negative effects of a remittance driven economy.

What do you think?

THE financial meltdown ushers the Philippine government on stage to a theater of the absurd: the source of economic breather, migrant workers, is now the source of pressure.

.....according to economist Ernesto Pernia, the crisis in the global financial system may reduce remittances, the economy’s lifeblood, as employers in destination countries cut costs.

...According to Pernia, remittances helped reduce poverty by 2-3 million persons.
“A 10-percent increase in the share of remittances in household income is associated with a 2.6-percent rise in the proportion lifted out of poverty, controlling for other variables [such as education and health],” Pernia said.


But, as Pernia said: ceteris paribus; the benefits of remittances is felt by poor household only if all other things being equal.

“On the whole, the [SIZE=3]poor appear to benefit from remittances [/SIZE]but [SIZE=3]only modestly compared with the richer households. [/SIZE]



Given that bigger proportions of the upper-income groups receive remittances and, indeed, greater average amounts, the [SIZE=3]beneficial effect of remittances is skewed in their [richer households’] favor.”[/SIZE]




For one, Pernia said while r[SIZE=4]emittances have greatly helped alleviate fiscal deficits, external debts, trade imbalances and scant foreign direct investments, it has also helped spawn a phenomenon called the “Dutch disease.”[/SIZE]
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[SIZE=3]Foreign-exchange inflows, for example, “may spur a real appreciation of the exchange rate, thereby constraining the development of export-oriented and import-competing industries.”[/SIZE]
[SIZE=3]
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Productivity also went down because of migration, according to Pernia, who noted that [SIZE=3]remittances “appear to exert a negative effect on the share of employed persons in the household.”[/SIZE]

He calls this the “[SIZE=4]complacency effect” wherein people who used to work have become dependent on the money sent by their kin abroad.[/SIZE]


It is something that Pernia said he observed as remittances grew to more than the foreign direct investment flowing into the country. “The remittance windfall may have a [SIZE=3]moral hazard effect [/SIZE]as the government softens in pursuing policy reform or improved governance while people are lulled into complacency.”




Taken from:



A Missing The Migration Gravy Train
by Dennis Estopace
Business Mirror
November 10, 2008

[uls]

The country has become addicted to remittances.

It's an economic coping strategy that worked before.

but it may not work this time.

[safeorigin]

again, the country should learn to help itself. medyo nakakahiya na nga whenever i meet singaporeans online. they refer to us pinoys as "maids".

[CVT]

Our OFWs would not have left the country if there were good work and life/future opportunities here. They have kept the economy afloat, but this will reach an inflection point soon enough, especially since the government is just practically sitting on its butt, or doing insignificant things to alleviate the situation...

6909:seehearspeak:

[A121]

It's a question on how these remittances are invested. Would they build a business or just buy an Expedition.

[Gen. Miting]

most OFWs invest in public transport like taxis and fx taxis.

[CVT]

But without work opportunities here in our country, who would be their customers? It's like all of us managing our own sari-sari stores and no one's buying......

7000:diver:

[goldencoil]

again, the country should learn to help itself. medyo nakakahiya na nga whenever i meet singaporeans online. they refer to us pinoys as "maids".

Agree ako dito.

Actually, yung Singaporean kong officemate, hesitant syang tawagin akong "Filipino" kasi akala nya pag tinawag nya akong Filipino eh mao offend ako kasi sa dito sa Singapore eh parang katabi lagi nun yung word na MAID.

[True Faith]

Agree ako dito.

Actually, yung Singaporean kong officemate, hesitant syang tawagin akong "Filipino" kasi akala nya pag tinawag nya akong Filipino eh mao offend ako kasi sa dito sa Singapore eh parang katabi lagi nun yung word na MAID.

Racist pala ang mga Singaporeans.

Though never experienced discrimination when I was there (2 years) my friend told me na if I will stay longer pa raw mararanasan ko rin.(pero thats long enough)

Well, Its expected. Our own country cant provide jobs for us.

Its the fault of both our government and us Pinoys.

When Pinoys open their business, we dont patronize them because "its Made in the Philippines"

We are so enamored in buying IMPORTED.Kasi "SOSYAL" and di "JOLOGS."

So is the government. So are the OFWs.

Even government employees' uniforms and books distributed by DEP Ed to our public schools are imported.

Almost everything in the country imported.

So local businesses dont thrive.

Whatever is left of the local industry is either dead or dying.

Thus, no local employment or livelihood opportunities available.

So we are forced to go abroad.

But we have dug up our own grave ( national image). A remittance dependent economy.

From Filipinos overseas regardless of work.

OFWs all over the world, from Britain to Singapore are now known as MAIDs.

[jpdm]

Very true, true faith!