Remittances,Trade and the Philippine Economy

Abstract

The relationships between trade, remittances from overseas workers and the domestic economy are examined for their implications for labor and trade policy. Import substitution and protectionism as well as weaknesses in the domestic economy continue to push Filipino workers overseas and encourage dependency on remittances. The limited use of remittances for real productive investments at the household level is associated with length of migration, reliance on overseas workers as a source of foreign exchange, and a failure to correct the structural imbalances of the economy. Unlike other Asian countries such as South Korea and Thailand, the Philippines is far from the turning points in trade and labor migration that allow net labor import. Implications of a coordinated trade and labor policy are discussed.