Remittances in the Philippines: Snapshot of a Global Trend
Many people in poor, underdeveloped countries are leaving their homes and families behind to migrate and seek employment abroad. They capitalize on the opportunity to move more freely in a globalized world, but large amounts of their higher incomes flow back to their struggling families in the form of remittances.
This short documentary, “Destination Anywhere”, (hat tip: Foreign Policy Blog) focuses on the impact of remittances in the Philippines, whose number one export is people; it is estimated that 11 million Overseas Filipino Workers (OFWs) are spread throughout the world. In 2006, over 15 billion dollars in remittances flowed into the Philippines, comprising 13% of the GDP. In 2007, the World Bank estimates that remittances increased to 17 billion dollars. The OFWs are comprised of workers both educated and uneducated, skilled and unskilled, but all share the path of seeking jobs abroad in hopes of providing for loved ones back home.
The effects of remittances are complex. In the Philippines, most remittance money is immediately spent on food, housing, and medical needs. Few invest in the economy, and only seven percent of recipients put money into savings accounts. Thus, most of the GDP growth in the Philippines is not really growth, because the economy develops little despite the increased cash flow. On the other hand, remittances play a significant role in the alleviation of poverty in countries like the Philippines, where the OFWs are considered national heroes.
While remittances have both positive and negative effects on poverty and the global economy, one thing is certain: with over 300 billion dollars in annual remittances (topping foreign aid and foreign direct investment in 2006), an economic trend of this magnitude is something that cannot be ignored.