Dividend from labor migration mulled

Can you monetize a child’s separation for more than a year from her mother working overseas? Such question has not only kept both mother and child sleepless at night but economists like Alvin Ang burning the midnight oil. With most of the eight million Filipinos overseas linked to their country one way or another, Ang said it’s time to face up to the socio-economic cost of such profitable arrangement. But for an economy that will not see diminished reliance on remittance inflows and overseas migration outflows in the coming years, Ang is searching for a formula where migration yields visible economic returns. We’re looking at the “net of net" –a dividend, said Ang, a professor at the University of Santo Tomas. That “net of net" is what Ang calls the “diasporic dividend" of the socio-economic costs of international migration to the country. This type of dividend, Ang explains to the OFW Journalism Consortium, will relate remittances with exports and imports. It is a calculation of the power of remittances beyond picking up the slack from weaker conditions in the country’s trade and foreign direct investments. This line of thought comes from what Ang said was the shift of the country’s place in global trade. “Before, the Philippine economy became globalized because of trade," Ang said. “Now, it is migration. It is people." His assertion is supported by the results of a survey by the US-based thinktank A.T. Kearney and the Foreign Policy journal. Four years of that globalization survey cemented he calls the Philippines’s showcase –its workers– in the global economic arena. The Philippines is being recognized for the “value of its workers," and not because of its products and investment prowess, Ang said. Dividend Ang's search for a dividend from the migration phenomenon was brought about by the results of the 2007 Globalization Index: the Philippines dropped to 38th overall, from being 31st in the 2006 index. That index’s Philippine ratings on trade, foreign direct investment, and remittances and personal transfers only affirm the “divergence" the Philippine economy felt, Ang observes. Since the 2004 Globalization Index, the Philippines has ranked first in the sub-category “remittances and personal transfers" in 2004 and 2006, and second in the same sub-category in 2005 and 2007. The Index had studied 12 variables grouped into four major categories: economic integration (where the Philippines placed 41st), personal contact (14th), technology (61st), and political engagement (49th). “Remittances and personal transfers" fall under personal contact. In the same 2007 Index, the Philippines ranked 24th in trade and 63rd in foreign direct investments –the lowest Philippine rankings in these sub-categories in the last four years of the Globalization Index. What Ang finds “interesting," citing Philippine economic data on exports, imports, and the current account (where remittance inflows are recorded), is that remittances only make up 15 percent of the combined total of exports and imports. Dependency What the Philippine results of the Globalization Index also revealed was that the “value of people" was recognized the most. The Globalization Index computed the rankings on “remittances and personal transfers" based on the total volume of remittance inflows and other transfers, with data based on the International Monetary Fund’s Balance of Payments. The total of these two inflows were then divided to countries’ total gross domestic product (GDP). The 2007 Index saw one of ten countries that are new entrants into the survey, Jordan, ranking first with a 24.19 percent remittances-to-GDP ratio. The Philippines’s ratio is 14.52 percent for second place, while Ghana, another new entrant into the Index, is third with a 14.45 percent. So in terms of percentage to GDP, even with today’s improving value of the Philippine peso, the dollar value of remittances to the dollar value of GDP remains high, Ang says. “And so is our dependency to remittances," he adds. Looking at the Index’s data on remittances vis-à-vis GDP, Ang noticed that the ratios for the world’s top two remittance-receiving countries, India (3.32 percent, for 32nd place) and Mexico (2.90 percent, for 35th place), are not that high. This means, Ang explains, that these countries “still rely internally-generated economic production" –unlike remittance-driven Philippines. The sustainability of such a situation for the Philippines is the next question, Ang says, if the country experiences a drop in workers’ deployment and remittances receipts. Demography The concept “diasporic dividend" is also in the writings of University of East London visiting fellow Dr. Ken Ife, an African national. His paper titled “The Diaspora Dividend" outlined the potentials investments by the African diaspora in Europe, Middle East, and North America in the continent’s small-and-medium enterprises (SMEs). Ife calls the diaspora Africans “sleeping giants (coming from) a land of immense economic, social and political opportunities". Some six million of them in the US, for example, have contributed US$1.1 trillion to the economy of the United States, while remitting only US$45 billion to African homelands. Ife’s line of thinking is what Ang hopes as the Philippine “diasporic dividend": overseas workers return to the country as producers “who can sell products to the rest of the world." This is even if the Philippines, says the economist, has yet to feel that “net of net" benefit from her army of citizens in 193 countries. Some economists, like Dr. Bernardo Villegas of the University of Asia and the Pacific, attribute what they call a “demographic dividend" to the contributions of overseas-based Filipino population in terms of remittances and some savings and investments. Demographers such as those in the Commission on Population define the demographic dividend as country’s opportunity to achieve faster economic growth when fertility rates are down, the labor force increases than the pool of dependents, and many workers are gainfully employed. However, PopCom’s recently-released primer of the Fourth State of the Philippine Population Report said that while international labor migration should have brought the country closer to this demographic dividend, the Philippines remains to have high unemployment rates, a low value of the difference between domestic savings and investments, high number of dependents, and limited number of jobs. Dream The country can achieve that demographic dividend, the PopCom report says, through internal means: reducing population growth rates, increasing domestic job generation, directing people’s savings to investments, and improving the quality of the labor force. But while overseas migration has yet to bring about a Philippine demographic dividend, Ang says the country’s policymakers should now find a way to achieve a diasporic dividend. His equation for this is return migration as an instrument to buoy domestic trade and investment, and the country packaging products both for Filipinos abroad and the markets within the countries where these Filipinos are. This is a way, he says, the country can capitalize on globalization, and make trade –not just migration– the engine that will sustain the Philippine economy. Thus, demography can possibly work for the Philippines given the global spread of the Filipino diaspora, says Ang. “We can possibly conquer the world," Ang said. “But the question is, what can Filipinos produce now that can be sold to the rest of the world?" - Jeremaiah M. Opiniano, OFW Journalism Consortium