Nepal, like many other South and SE Asian countries are trying to replicate the "success" of Philippines in exporting its excess skilled-labor globally. While remittances are big boon to those economies, the long-term political-economic downsides have not been thoroughly analyzed or discussed.
I fully support free migration of workers - I don't want less fortunate Nepalese to be constrained from realizing their full potential - but Nepalese policymakers must be aware of the downsides to those remaining behind. The downsides of "labor export" seems very similar to so-called "Dutch disease" in econo-lingo.
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Philippines Pays Human Cost of Globalization
William Pesek Jr.
2006-06-01 16:23 (New York)
June 2 (Bloomberg) -- More and more VIPs are arriving at Manila's international airport. They aren't movie stars or politicians who are getting the royal treatment with express lines and doting airline agents. They're middle-class laborers.
These unlikely VIPs are actually OFWs, or the 10 percent of the population known as ``overseas Filipino workers.' Given how much the $98 billion economy depends on the cash they send home to support families, it's hardly surprising OFWs would be treated like returning heroes.
The government is quick to call the 8 million-plus doctors, nurses, engineers, domestic helpers and entertainers sending home $10.7 billion a year -- more than a tenth of the economy – the nation's secret weapon. The hard currency supports banks, boosts telecommunications, retail, transportation and real-estate sectors, and helps the government pay its debt.
With the advent of globalization and the Internet, the Philippines found something akin to oil within its borders: a young and growing English-speaking population. While it ships electrical equipment, garments, fruits, chemicals and other goods overseas, people are by far its most lucrative export.
``Overseas Filipinos constitute our country's biggest comparative advantage in the borderless world of our time,' Aurelio Montinola, president of Bank of the Philippine Islands, the nation's second-largest lender by assets, said in a speech in April. He argued that the ``Philippine miracle' eventually will become ``the standard for new mobile global order.'
Addiction
One wonders if that's such a good thing. Should other developing nations really encourage a growing share of their people to move overseas to keep economies afloat?
In poverty-plagued nations like the Philippines, people have every right to seek out opportunities. Many have little choice but to work in Berlin, Hong Kong, Kuwait, Riyadh, Singapore, Tokyo or elsewhere. With the government failing its citizens by not creating enough well-paid jobs at home, Filipinos do what they have to do to feed families.
There's a problem with all this, though. ``It's like an addiction -- one that over time may do more harm than good,' said Ifzal Ali, chief economist at the Manila-based Asian Development Bank.
Migration on the scale unfolding in the Philippines creates a potential brain drain with economic implications. Young, hard-working Filipinos deplete the labor pool when they move overseas. The exodus also relieves pressure on the government to provide decent jobs and higher living standards.
No Incentive
Just as leaders in oil- or diamond-rich nations have no incentive to create other industries to employ the masses, the Philippines is growing complacent amid all the cash flowing in
from abroad.
Remittances plug a rickety financial system and help the government service debt that swallows a third of the budget through interest payments. With so much money coming in, and so many Filipinos lined up to leave and send home even more, why fix one of Asia's frailest economies?
It's a really bad sign when one of your biggest growth industries is expatriates. That hasn't dawned on politicians all too willing to facilitate the trend. The crisis in Philippine medical care alone should be enough to unnerve politicians. Since nurses earn more money in the U.S. than doctors do at home, many medical professionals leave.
Brain Drain
When your best and brightest depart, eventually your labor pool weakens. Government statistics show many teachers and airline pilots are bolting, too. Surveys say countless more Filipinos, especially women, would leave if immigration laws in richer nations allowed it. The Philippines needs that talent to compete with China and India.
And there may even be a social cost from so many children being raised by extended families, instead of their mothers. In their 2003 book, ``Global Woman,' Arlie Russell Hochschild and Barbara Ehrenreich explored that risk, as well as ``the female underside of globalization.'
``Each year, millions leave Third World countries for jobs in the homes, nurseries and brothels of the First World,' they wrote. ``This enormous transfer of labor results in a risky displacement, in which the same energy that flows to wealthy countries is subtracted from poor ones, easing a `care deficit' in rich countries, while creating one back home.'
Great Potential
The massive migration we're seeing from poor nations to rich ones is in its infancy. It will only accelerate as aging populations from the U.S. to Japan to Germany step up global recruitment efforts. The economic and cultural implications of this trend have yet to be adequately explored.
In the case of the Philippines, the government has done a poor job of spreading the benefits of roughly 5 percent growth. A third of the nation's people still live on 60 U.S. cents a day. President Gloria Arroyo isn't giving much confidence in the future to the millions more who would leave if they could.
The Philippines has great potential. If the government were to use today's growth to reduce the national debt and improve education, health care, roads, bridges, ports and power systems, the Asia-Pacific region's 14th-biggest economy would have a bright future.
Now tell that to the millions voting with their feet and leaving the Philippines. The risk is that one of Asia's most promising economies will get trampled in the process.
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