Impact of Overseas Filipino Workers Income to the Economy
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INTRODUCTION
The Philippine economy is in a sound position today in part because of the steady growth and size of remittances of Overseas Filipino Workers (OFWs) to the country. The volume of these remittances has continually grown over time as more and more Filipino workers have found jobs abroad.
It is said that OFWs are the modern heroes of the Philippines, because of their sacrifice to go abroad to work for the betterment of the economic status of their families. Unbeknownst to many, there is another reason why they are called as such—working abroad and sending their hard-earned salary to their families actually aid in the growth of the Philippine economy, all thanks to their remittances.
STATEMENT OF THE PROBLEM
In what way do OFW remittances contribute to the Philippine economy?
OBJECTIVES OF THE STUDY
MUST
To explain how OFW remittances affect the local economy.
WANT
To determine the advantages and disadvantages of working abroad.
DISCUSSION
OFW remittances are defined as the portion of earnings of OFWs or the money that are transferred to their families in the Philippines. Remittances sent through the international banking system are immediately caught in the country’s balance of payments which is tracked by the Bangko Sentral ng Pilipinas (BSP). The task at hand is to explore how worker remittances contribute to recent economic developments in the country.
OFWs do more than play a vital role in the economy. OFW support is closely linked to disaster response, such as typhoon Yolanda relief efforts. According to Pinoy Abroad, OFWs in the United Arab Emirates “sent home some Dh 10,000 for [Yolanda] victims” in November 2013. That is more than 120,000 pesos. No wonder OFWs are considered patriots or heroes.
In what other ways do OFW remittances specifically help the growth of the country’s economy?
HIGHER PURCHASING POWER
Money received by the family of the OFW is spent for survival—food, clothing, shelter, utility, etc. Thus, this money helps in domestic consumption, a key factor in the expansion of the economy. It also means that OFW remittances are tools for the economic betterment of a family, because they already have higher funds. Purchasing money is the ability of a person to buy a commodity if his/her money is sufficient for that object. It is the number of goods and services that can be purchased with a unit of currency. It can also be used in entrepreneurial pursuits and technological transfers.
HIGHER GROSS-international reserves (Gir)
GIR are the sum of all foreign exchanges. Remittance is the second largest source of foreign exchange, following exports. GIR is comprised of foreign investments, foreign exchanges, gold, and special drawing rights. With higher OFW remittance, the country’s currency becomes stronger than before. This means that Philippines can defend peso against other currencies.
STRONGER PESO
With a stronger currency, the