Remittances and our System of Education

A few issues ago, I mentioned in this column that remittances from overseas workers are helping keep this region's economy grow.

I had that feeling because the increase in agricultural production was accompanied by an increase in unemployment and yet there was a leap in number of cellsites, the phone landlines and applications for business names.

Such a situation where local production is outdistanced by consumer demand strongly points to income flows from outside the region, primarily from abroad.

There was, however, a recent study of the World Bank that such remittances also have negative effects.

First, the remittances are generally spent rather than invested and do not add to an economy's stock or enhance its productivity.

Second, it reduces the incentive for recipients to seek work.

These two negative effects are, aside from being debatable as to their truthfulness, are overcome by the positive effects cited by economists.

In the Philippines, remittances sent through banks account for 10.8 percent of our Gross Domestic Product (the value of goods and services produced in the economy in a year). If we consider remittances sent through informal channels this would account for 20 percent of GDP.

Imagine what would happen without those dollars, yens, and other currencies. We will have a declining GDP and very high unemployment.

Clearly, the country would be in deep crisis without the remittances.

What this means is that we must plan for increasing the value of these remittances by improving the skills of our workers. The educational system would be a mainstay in this strategy. If we improve our training programs through better equipment and better teachers, then we will immensely improve our skills.

However, we need to overcome the “braindrain” by training more people. Even if many go abroad, a large workforce will remain to provide services in the country.

Thus, I feel that ten years down the road our economy will become more dependent on the remittances of our overseas workers. Our system of education would by then be much improved and well-equipped to perform its role.

Eastern Visayas would have a distinct advantage because we have 13 state colleges and universities that will take the lead.

We must meet the new year with optimism. And these trends look optimistic

Merry Christmas and Happy New year!