Beyond the remittances-driven economy: Notes as if the long run mattered

Felipe Medalla, Raul Fabella and Emmanuel de Dios ()
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Felipe Medalla: School of Economics, University of the Philippines Diliman

No 201411, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: This paper discusses the causes and consequences of the current trend in which a principal driver of growth is inward remittances by workers deployed overseas. The main benefit of the phenomenon is an easing of the fiscal burden arising from the effectively large transfer from workers to the government. On the other hand, the “Dutch Disease” it causes takes a longterm toll on the tradables sector. The paper concludes that the fiscal payoffs from the phenomenon are best used by reinvesting these in the foundations of domestic competitiveness—particularly education and focused infrastructure—to offset the worst effects of the trend and prepare prudently for the time it ends or reverses.

Keywords: Philippine economy; labour migration; migrant remittances; remittances-driven economy; services sector; exchange rate; Dutch Disease; “divide-by- N” syndrome; transport infrastructure; political infrastructure cycle; political institutions (search for similar items in EconPapers)
JEL-codes: B52 F22 F24 O24 O53 R42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2014-08
New Economics Papers: this item is included in nep-hme and nep-sea
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Published as UPSE Discussion Paper No. 2014-11, August 2014

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Persistent link: https://EconPapers.repec.org/RePEc:phs:dpaper:201411

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