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An Empirical Study on the importance of Remittance and Educational Expenditure on Growth: Case of the Philippines

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  • Tchantchane, A.
  • Rodrigues, G.
  • Fortes, P.C.
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    Abstract

    The study undertakes an econometric analysis of the contribution of remittance, education expenditure and investment to economic growth rates in the Philippines. Remittance is the most important source of finance for the Philippines. Hence, this paper is an attempt to provide insights into understanding the implications and verifying the hypothesis that remittance is the engine that drives growth and economic development in the Philippines. The ARDL model used enables the researchers to examine long-run as well as short-run relationship between the dependant variable and independent variables. The results show a positive relationship between the rate of economic growth and remittance as well as education expenditure. However, the findings show that there is no evidence of a long-run relationship between investment in the Philippines and the rate of economic growth. A deeper understanding of the OFWs and the economic activities in the Philippines enabled the researchers to draw the conclusions that direct as well as indirect effects of remittance including expenditure on education and consumption expenditure drives economic growth in the Philippines. The Philippines thus has ‘a consumption led growth’.

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    Bibliographic Info

    Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

    Volume (Year): 13 (2013)
    Issue (Month): 1 ()
    Pages: 173-186

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    Handle: RePEc:eaa:aeinde:v:13:y:2013:i:1_14

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    Related research

    Keywords: Education expenditure; economic growth; investment; migrant; Philippines; remittances.;

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    References

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    1. Ahortor, Christian R.K. & Adenutsi, Deodat E., 2008. "The impact of remittances on economic growth in small-open developing economies," MPRA Paper 37109, University Library of Munich, Germany.
    2. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
    3. Eckstein, Z. & Zilcha, I., 1991. "The Effects of Compulsury Schooling on Growth Income Distribution and Welfare," Papers 38-91, Tel Aviv.
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    16. Ducanes, Geoffrey & Abella, Manolo I, 2008. "Overseas Filipino workers and their impact on household poverty," ILO Working Papers 411223, International Labour Organization.
    17. Vargas-Silva, Carlos & Jha, Shikha & Sugiyarto, Guntur, 2009. "Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth," ADB Economics Working Paper Series 182, Asian Development Bank.
    18. Giulia Bettin & Alberto Zazzaro, 2009. "Remittances and Financial Development:;Substitutes or Complements in Economic Growth?," Mo.Fi.R. Working Papers 28, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
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