Business, Investment Probabilities and Remittances in
Two Rural Hometowns in the Philippines
Alvin P. Ang and Jeremaiah Opiniano12
University of Santo Tomas, Manila
ABSTRACT
A generation of overseas worker remittances has allowed the Philippines to improve its
macroeconomic fundamentals and provide needed foreign exchange for its economic requirements.
These remittances have also led to urban expansion and sustained consumption. Nonetheless, it
has been observed that the dividends from remittances have relatively evaded rural development.
In this study, we selected two municipalities that are geographically near capital cities of Tagbilaran
in Bohol and Naga in Camarines Sur provinces. These municipalities have a sizeable number of
migrant workers and yet have remained in the lower income class of municipalities (4 th and 5th).
Moreover, these towns are largely agricultural with the main sources of income basically farming
and fishing. Furthermore, it is observed that both areas have little economic activities yet robust
consumption activities are present particularly among migrant families. We hypothesized that the
reason for the disconnect between economic activity is the lack of financial literacy among migrants
and their families left behind. To validate this hypothesis, we conducted a two-level analysis – a
rapid rural analysis using secondary data for the municipalities and a survey of migrants who were
home and their families. The rapid rural analysis was to provide the environmental situationer,
while the survey was to gather first hand information from the migrants and their families.
Included in the survey are questions to determine what are the key factors in making migrants and
their families invest and start entrepreneurial activities in their hometowns. The design is to
generate logit estimates of these factors and help these rural hometowns design policies to
encourage local investments and entrepreneurship. It is our view that while generic policies for
investments and entrepreneurship can be developed by local governments, there is benefit in
designing direct policies to attract migrants and their families as they are holders of resources and
are rooted in their communities. Preliminary results of the survey allowed us to say that less than
50% of migrants and their families surveyed are investors and entrepreneurs in the hometowns
though more than 70% have savings. The primary constraint for entrepreneurship is the high
electricity costs for both communities. As the regards the logit estimates, we find that migrants’
decision to business and investments are affected primarily by amount of remittances and length of
time sending remittances. Migrant families, on the other hand, revealed that families fully
dependent on remittances will not go into business or investing. Financial literacy plays a crucial
role for both groups.
1
Research Associates, Research Center for Culture, Education and Social Issues, University of Santo Tomas;
corresponding author: Alvin P. Ang [email protected]
2
Opiniano – Executive Director, Institute for Migration and Development Issues