Diaspora, Remittances, and International Reserves

A recurring economic statistic is OFW remittances–which are by this time, a recognized benefit to the economy through the infusion of hard currency which helps shore up international reserves.

Just how much of an impact are OFW remittances?

We need only refer to two critical Bangko Sentral (BSP) statistics:

OFW Remittances: $14 Billion (2007)

BSP Gross International Reserves: $33 Billion (2007)

Those OFWs contribute an amount equal to 42% of the central bank’s reserves! Not chump change!

There’s always a lot of nationalism surrounding talks about OFWs. To some they are unpatriotic, abandoning the Philippines for the sake of better pay abroad. To others they are unsung heroes, helping shore up our economy with hard currency.

The economic arguments for overseas employment can be myriad, but at its core is Purchasing Power Parity, nicely illustrated by the Big Mac Index:

With the facts at our disposal now, regardless of any blind sentimental argument–the loop closes on the phenomena of overseas workers: economics sends them out of the country, but economics also sends their benefit back in.

Economic heroes all.