An Empirical Study on the importance of Remittance and Educational Expenditure on Growth: Case of the Philippines

A. Tchantchane, G. Rodrigues and P.C. Fortes

Applied Econometrics and International Development, 2013, vol. 13, issue 1, 173-186

Abstract: The study undertakes an econometric analysis of the contribution of remittance, education expenditure and investment to economic growth rates in the Philippines. Remittance is the most important source of finance for the Philippines. Hence, this paper is an attempt to provide insights into understanding the implications and verifying the hypothesis that remittance is the engine that drives growth and economic development in the Philippines. The ARDL model used enables the researchers to examine long-run as well as short-run relationship between the dependant variable and independent variables. The results show a positive relationship between the rate of economic growth and remittance as well as education expenditure. However, the findings show that there is no evidence of a long-run relationship between investment in the Philippines and the rate of economic growth. A deeper understanding of the OFWs and the economic activities in the Philippines enabled the researchers to draw the conclusions that direct as well as indirect effects of remittance including expenditure on education and consumption expenditure drives economic growth in the Philippines. The Philippines thus has ‘a consumption led growth’.

Keywords: Education expenditure; economic growth; investment; migrant; Philippines; remittances. (search for similar items in EconPapers)
JEL-codes: E21 J61 O16 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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