The Importance Of Remittances In The Philippines

During the past decade, remittances have become an important source of income in many developing countries, especially in the Philippines. Migration across national borders has emerged as a global phenomenon. In 2013, 232 million people – 3.2 percent of the world 's population – lived outside their country of origin (UN-DESA, 2013). Most people move from their country to another in search of better economic and social opportunities. Other possible reasons to migrate are: standard of living not being high enough, low value of wages, not enough jobs that are available in a particular place or for a particular type of work, or a lack of educational opportunities.

When Overseas Filipino Workers (OFWs) send home part of their wages in the form of cash to support their families, this transfer is known as workers’ or OFWs’ remittances. Remittances have been growing rapidly in the past few years and now represent the largest source of foreign income for many developing countries (International Monetary Fund, n.d). For instance, in the case of Philippines in August 2015, personal remittances from OFWs totalled $2.3 billion, bringing the total personal remittances to $17.9 billion. For the first eight months of 2015, cash remittances registered a growth of 4.1 percent year-on-year to $16.2 billion (Official Gazette, 2015).

Remittances’ impact on economic growth is an important area of research. It is one of the main sources of external financing in addition to exports and foreign