Workers’ Remittances and Economic Growth in the Philippines

This paper considers the present issues surrounding the role of workers remittances and its contribution/effect on economic growth and development. In particular, this paper focuses on how such remittances have been able to spur development and growth. As a case study, the paper focuses on the Philippines, one of the countries in the world with a long history of sending workers abroad. In 2005, the Philippines received approximately US$11Bn of remittances, almost 10% of its GDP. It ranks as the 3rd largest recipient of remittances in the world after India and Mexico. Along this line, the paper looks into the following areas: (a) remittance and overall growth, (b) linkages between remittances and microfinance, (c) tracing the contribution of remittances to countryside development, and (d) relationship between worker remittances and structural reform policies. We are also concerned at how these remittances have impacted the poor in general. This is important as the expected benefits have generally been unfelt at the level of the poor. We hypothesize that workers’ remittance have not been properly utilized into productive and investment uses in the Philippines. There are strong anecdotal evidences that show that most of these resources are being used to fund conspicuous consumption. Hence, we would like to find ways where these resources can be harnessed into funding development needs of the country.Remittances, Development, Migrant Workers

A Theoretical Reexamination of Privatization: Assessing its Welfare and Distributional Impacts

Privatization was one of the significant public policy adopted by many countries in the last two decades. Previous and recent studies on its efficacy have focused mostly on the gains at the firm and industry levels. Differing from that approach, this paper attempts to reconsider impacts of the policy from a viewpoint of the economy as a whole via a theoretical examination. Specifically, it supposes an economy with two goods, two producers and two consumers. Within this economy, one of the consumers is assumed to be not able to obtain one good that is regarded as a necessity. Since it is considered that a basis of government intervention is to provide some necessity to people who would not be able to obtain it otherwise, government intervention on some production is assumed to satisfy this purpose. Utilizing the method of comparative statics, the paper shows how the welfare of different kinds of consumers is affected by this intervention. Specifically, it argues that the intervention can decrease the welfare of one consumer and increases that of the other, and that it leads to higher social welfare, showing a rationale for government intervention into the production process.privatization, efficiency, welfare impacts, general equilibrium

Is the Rural Hometown a Worthwhile Investment? (IMTFI Blog)

This is Part 2 of 2 blogposts about financial inclusion and savings behaviors in teh Philippines: https://www.imtfi.uci.edu/research/2014/opiniano_ang.phpProject abastract: This mixed methods action research from the Philippines that was supported by the IMTFI sought to determine if financial inclusion is a factor for remitters’ and remittance recipients’ investing in the rural hometown. Overseas remittances are a development resource for the countries where overseas migrants come from —but so are the rural communities where they were born. Overseas migrants even maintain a relationship with their rural communities since their families reside there, and they still receive remittances from breadwinners abroad. Is the rural community’s socio-economic and investment conditions conducive for overseas townmates and their households to invest in? But do these rural folk, with or without overseas remittances, have financial aptitude levels that can empower them to save and invest their surplus earnings in the place that they are familiar with? With rural financial institutions also coming in to the picture to lure this segment of the rural market called overseas migrants, are these banks, cooperatives and microfinance institutions capturing this rural hometown’s migrant market?To answer these questions, the researchers utilized a mixed methods research tool tested in two earlier rounds. Called the Remittance Investment Climate Analysis in Rural Hometowns, RICART is a tool rural birthplaces, migrant organizations, civil society groups, financial institutions and local governments can use to determine ways of luring overseas-based townmates for savings and investments. Quantitative market surveys were done targeting overseas migrants and migrant and non-migrant households who were physically present in the community, and these were subjected to a logit regression to determine probabilities of saving, investing and doing business in the rural hometown. A rapid rural appraisal was also done to get secondary data that is under the guidance of a Local Competitiveness Framework that was developed locally by the Philippine government and some academics. Key informant interviews with local officials also guided the rapid rural appraisal. Finally, a focus group discussion with some migrant household heads helped researchers conduct a phenomenography of the similarities and differences surrounding rural investing decisions by remittance recipients. Putting all these data together through data triangulation enabled the researchers to present a Remittance Investment Climate (ReIC) analysis of the locality, the first-class municipality of Guiguinto in Bulacan province in the Philippines (an hour’s drive north of the Philippine capital Manila)

Essays on family business groups, corporate investments, and cash management

This thesis consists of three independent essays in empirical corporate finance. The first essay examines how the business group structures facilitate higher investment rates of group-affiliated firms relative to standalone firms in the face of supply shocks to external financing precipitated by the 2008 Global Financial Crisis. This study finds that access to an internal capital market via membership of a business group moderates the firms’ dependence on external capital. Consequently, group-affiliated firms have financing and investment advantages over standalone firms especially during a financial crisis. The evidence sheds light on the heterogeneity of firm-level investment policy responses when external capital markets are under severe stress. The second essay examines whether a firm’s qualitative funding disclosures provide credible information to the market about the firm’s financing policy. Using an innovative textual analysis technique known as grammatical Natural Language Processing to identify types of funding sources in the “Liquidity and Capital Resources” section of 10-K filings, the study documents evidence that firms that disclose plans to rely on external financing do indeed issue more equity and debt securities, and have higher investment rates in the next period. Moreover, since the disclosures transfer information to the market, they reduce information asymmetry, and consequently lead to a lower cost of capital for firms disclosing more information. This study sets a new benchmark for textual analysis methodology, and stresses the importance of qualitative disclosures in providing useful predictive information to outsiders. The third essay examines how political uncertainty affects corporate cash holdings. The study’s use of hand-collected data on political incidents of a non-electoral nature instead of national elections to proxy for political uncertainty mitigates endogeneity concerns. Consistent with the precautionary motive for holding cash, the results show that firms increase cash balances by 5.2% in years when non-electoral incidents occur, while there is no statistically significant change to cash holdings around national elections. The two key implications of this study are 1) political uncertainty significantly impacts cash management decisions, and 2) national elections are not a good identification of political uncertainty

A performance comparison of single product kanban control systems

[EN] This paper presents a simulation experiment comparing the Single Stage, Single Product Base Stock (BS), Traditional Kanban Control System (TKCS) and Extended Kanban Control System (EKCS). The results showed that BS incurs the highest cost in all scenarios; while EKCS is found to be effective only in a very niche scenario. TKCS is still a very powerful factory management system to date; and EKCS did not perform exceptionally well. The only time EKCS did outperform TKCS was during low demand arrival rates and low Backorder (Cb) and Shortage costs (Cs). That is because during then, it holds no stock. The most important discovery made here is that EKCS becomes TKCS once it has base stock (or dispatched kanbans). The results have also evinced the strength of the pure kanban system, the TKCS over BS. Hence managers using BS should consider upgrading to TKCS to save cost.Ang, A. (2015). A performance comparison of single product kanban control systems. International Journal of Production Management and Engineering. 3(1):57-74. doi:http://dx.doi.org/10.4995/ijpme.2015.3038.SWORD577431Aghajani, M., Keramati, A., & Javadi, B. (2012). Determination of number of kanban in a cellular manufacturing system with considering rework process. The International Journal of Advanced Manufacturing Technology, 63(9-12), 1177-1189. doi:10.1007/s00170-012-3973-yAl-Hawari, T., Aqlan, F. (2012). A software application for E-Kanban-based WIP control in the aluminium industry. International Journal of Modelling in Operations Management, 2(2): 119-137.Ang, A., Piplani, R. (2010). A Model for Determining the Optimal Number of Base Stock and Kanbans in a Single Stage Extended Kanban Control System (EKCS). Paper presented at the Proceedings of the 5th AOTULE International Postgraduate Students Conference on Engineering.Boonlertvanich, K. (2005). Extended-CONWIP-Kanban System: Control and Performance Analysis. (Ph.D.), Georgia Tech, USA.Hopp, W. J., Spearman, M. L. (2008). Factory physics (3rd ed.). New York, NY: McGraw-Hill/Irwin/Irwin.Monden, Y. (1983). Toyota production system: practical approach to production management. Norcross, GA: Industrial Engineering and Management Press, Institute of Industrial Engineers.Monden, Y. (1998). Toyota production system : an integrated approach to just-in-time (3rd ed.). Norcross, Georgia: Engineering & Management Press.Zipkin, P. H. (2000). Foundations of inventory management. Boston: McGraw-Hil

A PHL strategy on financial inclusion: More on the means than reversing mindsets? (IMTFI Blog)

This is Part 1 of 2 blogposts about financial inclusion and savings behaviors in teh Philippines: https://www.imtfi.uci.edu/research/2014/opiniano_ang.phpProject abastract: This mixed methods action research from the Philippines that was supported by the IMTFI sought to determine if financial inclusion is a factor for remitters’ and remittance recipients’ investing in the rural hometown. Overseas remittances are a development resource for the countries where overseas migrants come from —but so are the rural communities where they were born. Overseas migrants even maintain a relationship with their rural communities since their families reside there, and they still receive remittances from breadwinners abroad. Is the rural community’s socio-economic and investment conditions conducive for overseas townmates and their households to invest in? But do these rural folk, with or without overseas remittances, have financial aptitude levels that can empower them to save and invest their surplus earnings in the place that they are familiar with? With rural financial institutions also coming in to the picture to lure this segment of the rural market called overseas migrants, are these banks, cooperatives and microfinance institutions capturing this rural hometown’s migrant market?To answer these questions, the researchers utilized a mixed methods research tool tested in two earlier rounds. Called the Remittance Investment Climate Analysis in Rural Hometowns, RICART is a tool rural birthplaces, migrant organizations, civil society groups, financial institutions and local governments can use to determine ways of luring overseas-based townmates for savings and investments. Quantitative market surveys were done targeting overseas migrants and migrant and non-migrant households who were physically present in the community, and these were subjected to a logit regression to determine probabilities of saving, investing and doing business in the rural hometown. A rapid rural appraisal was also done to get secondary data that is under the guidance of a Local Competitiveness Framework that was developed locally by the Philippine government and some academics. Key informant interviews with local officials also guided the rapid rural appraisal. Finally, a focus group discussion with some migrant household heads helped researchers conduct a phenomenography of the similarities and differences surrounding rural investing decisions by remittance recipients. Putting all these data together through data triangulation enabled the researchers to present a Remittance Investment Climate (ReIC) analysis of the locality, the first-class municipality of Guiguinto in Bulacan province in the Philippines (an hour’s drive north of the Philippine capital Manila)

Impact of the Global Crisis on Overseas Workers and the Families-Left-Behind: A Snapshot of the Philippine Case

The Global Economic Crisis (GEC) of 2008-2009 was seen as negatively affecting the Philippines in a different way. Most countries affected by the GEC suffered export declines and domestic economic slowdown leading to the collapse of certain sectors in the economy. Though the Philippines was affected this way in some aspects, it is more the unique nature of its economy having around 10% of its population abroad working or permanently settled but continuing to send a significant amount of remittances. It was the concern of the Philippines that the crisis affecting many of the destination countries of its migrant workers will lead to massive layoffs and creating a much larger crisis at home. Based on this hypothesis, this study attempts to view how the GEC actually affected the economy by directly looking at the impacts on the overseas Filipino workers (OFWs) and their families-left-behind in the Philippines and how they coped with the perceived effects of the crisis. The study sampled the National Capital Region or Metro Manila. It used a semi-structured questionnaire which profiled the demographic characteristics and determined the coping strategies of the respondents. A focus group discussion with ten (10) of the respondents for the purpose of validating the data gathered by the questionnaire was also done. The results show that a number of affected households indicate decreases in their family income during the crisis period as compared to previous years. However, there are relatively few affected workers who returned home. Majority opted to stay abroad hoping for better opportunities in their affected host countries rather than to return home. The families-left-behind also adjusted to the crisis by implementing coping strategies such as cuts in spending (primarily in recreation, food and utilities), seeking extra jobs/sideline and a decline in allocation for savings