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

Author

Listed:
  • Felipe M. Medalla

    (School of Economics, University of the Philippines Diliman)

  • Raul V. Fabella

    (School of Economics, University of the Philippines Diliman)

  • Emmanuel S. de Dios

    (School of Economics, University of the Philippines Diliman)

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.

Suggested Citation

  • Felipe M. Medalla & Raul V. Fabella & Emmanuel S. de Dios, 2014. "Beyond the remittances-driven economy: Notes as if the long run mattered," UP School of Economics Discussion Papers 201411, University of the Philippines School of Economics.
    • Handle: RePEc:phs:dpaper:201411
    as

    Download full text from publisher

    File URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1465/941
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    References listed on IDEAS

    as
    1. Indermit Gill & Homi Kharas, 2007. "An East Asian Renaissance : Ideas for Economic Growth," World Bank Publications - Books, The World Bank Group, number 6798.
    2. Llanto, Gilberto M., 2002. "Infrastructure Development: Experience and Policy Options for the Future," Discussion Papers DP 2002-26, Philippine Institute for Development Studies.
    3. Arsenio M. Balisacan & Hal Hill (ed.), 2007. "The Dynamics of Regional Development," Books, Edward Elgar Publishing, number 4178.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    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;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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