Study cites two regions ‘efficiently use’ OFW money for dev’t

OFW Journalism Consortium

Philippine regions with higher growth rates used remittances for development efficiently, a paper by a University of Santo Tomas economist finds.

College of Commerce Assistant Dean Ma. Socorro Calara said these are the Cordillera Administrative Region, Southern Tagalog region, and the National Capital Region. Her study cited these regions were more efficient in making remittances contribute to regional productivity, which is measured by gross regional domestic product or GRDP.

Calara’s paper was featured at a research forum the same week government officials said that the overall gross domestic product of 0.92 percent in 2009 was the lowest in 11 years.

Titled “Remittances and Regional Performance for the Philippines,” Calara’s paper looked at data from the triennial Family Income and Expenditures Survey (FIES) from 1988 to 2006.

Using FIES results in the same period, Calara also culled data on cash received from abroad or remittances received by households of overseas Filipino workers (OFWs).

These were then juxtaposed to GRDP data, as well as regional data on personal consumption and government spending, and investments from 1998 to 2006.

Calara’s econometric calculations showed that the highest efficiency score is one. The NCR, CAR and Southern Tagalog consistently earned that score.

The next highest scores in Calara’s computations went to Central Visayas (0.99); Davao region and Western Visayas (both 0.98); and, Zamboanga and Northern Mindanao regions (both 0.97).

The scores reflect how remittances migrant households received seeped in efficiently or not to regional development activities.

Even if regions such as Ilocos (0.69 average), Cagayan Valley (0.79) and Central Luzon (0.91) got more remittances since they had more overseas migrants and more remittances than other regions, these regions are in the bottom rungs in Calara’s study.

Ilocos is even the least efficient region of all 17 regions covered by the study, while Central Luzon is only 10th overall.

Calara argued that her study is valuable to regional development since it is in the birthplaces of overseas Filipinos were the remittances are used to stir local economic activity.

“The (household members) of migrants are the immediate recipients of remittances. Whether these remittances are spent to purchase basic commodities, durable goods or are invested in productive endeavors, it is the region which benefits from such activities —whether directly or indirectly through the multiplier effect of remittances and the subsequent stimulus to labor,” Calara wrote.

Calara’s paper also looked at how many of the 14 regions with data were efficient in development, with and without remittances.

She came into the latter result by deducting a region’s remittances data from GRDP and regional personal consumption expenditure.

Since some regions were already efficient, Calara wrote that remittances “do not contribute to efficiency” and “have no effect on [that region’s] regional efficiency performance”.

CAR, Southern Tagalog and NCR are part of this grouping.

But for eight of the 14 regions found to be inefficient in 2006, Calara said the results may mean that remittances may have had a positive effect, had no effect, or have a negative effect on regional development.

As for NCR and regions near it, Calara observed that the sending of more overseas workers complements high government spending and investments in these places.

Yet on the overall, Calara said the paper “showed mixed results with respect to the effect of remittances on the regional performance of the Philippines”.

At the same time, the multiplier effect of remittances in rural areas is higher than those in urban regions, Calara’s computations showed.

Estimates using the 2000, 2003 and 2006 FIES data revealed that some 1.107 million households of migrant workers got P208.848 billion in 2000.

The number of households increased by 18.34 percent after three years to 1.31 million and having received some P245.856-billion worth of remittances.

The 2006 FIES showed the number of households increased by 22.2 percent, having received some P348.524 billion.

By percentage share to the national total, all regions outside of NCR have been getting increased remittances: 71.56 percent in 2000, 76.58 percent in 2003, and 78.89 percent in 2006.

Among provincial regions, Southern Tagalog (to include sub-regions Calabarzon [or Cavite, Laguna, Batangas, Rizal and Quezon] and Mimaropa [Mindoro Occidental, Mindoro Oriental, Romblon, and Palawan]) are the top-most recipients of remittances from abroad, followed by Central Luzon and the Ilocos region (see Table 1).

Data from the National Statistical Coordination Board show that Southern Tagalog (combining Calabarzon and Mimaropa) contribute some 14 percent to Philippine GDP.

A third of Philippine production comes from Metro Manila.

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