Leveraging Labor Emigration and FDIs for Inclusive Growth in the Philippines

February 19, 2024

This Policy Note examines the intricate dynamics between international labor deployment, remittances, foreign direct investment (FDI) flows, and inclusive growth in the Philippines. Empirical evidence suggests that these factors do not necessarily bolster inclusive growth, as they often worsen problems within the labor-intensive agricultural sector. However, the Philippines can still pursue inclusivity by addressing critical economic constraints such as inadequate infrastructure, limited access to financing, and regulatory hurdles. Strategic investments in human capital development and targeted support for the agricultural sector are important strategies that the government must consider. Redirecting remittances toward savings, investment, and entrepreneurial ventures can amplify their positive economic impact. Additionally, mitigating the insufficient capital in capital-intensive industries is essential to enhance their capacity to absorb labor from labor-intensive sectors. Through the right interventions and complementary policy frameworks, this Note concludes that remittance and FDI inflows can be leveraged to promote inclusive growth in the Philippines.