Money sent home by immigrant workers makes a dramatic impact in developing countries. Reporting from the Philippines, Jonathan Rowe reveals that the effects go far beyond economics.

Jonathan Rowe| July/Aug 2007 issue
A visitor to rice country in the Philippines these days encounters scenes that don’t add up. Amid the bamboo houses and scrawny yapping mutts are sturdy cement dwellings with televisions and other appliances and maybe even a computer and an SUV. The rice fields next to these homes are no bigger than the others. Where does the money come from?
In Filipino cities, meanwhile, American-style mega-malls, with Burger Kings and Pizza Huts, are rising up near sprawling squatter colonies and landscapes of grimy cinder block and corrugated rust. Inside, you almost could be in an air-conditioned First World cocoon, except for the security at the doors, and the bathrooms without toilet seats.
This is not a rich country. A middle-class salary is perhaps $800 to $1,000 a month. Forty percent of the 90 million citizens make less than $2 a day. How can people afford those Nikes?
You could ask Delia Fabillon. She has a husband and five children on the island of Panay, but she is not with them much. In 1993, when her youngest was eight months old, she left the Philippines to work abroad as a housekeeper and nanny, first in Taiwan and then in Hong Kong. Since then, she’s come home once a year for visits. Instead of being there herself, she sends money, and those strong Hong Kong dollars, translated into anemic Filipino pesos, support the family and send her kids to school. When I visited her on Panay a year ago, she seemed almost a visitor herself.
The Delias in the world today are many. Developing countries—India, Mexico and the Philippines especially—are coping with the global economy and their own burgeoning populations in part by exporting workers. According to a Worldbank report by Ernesto Pernia, professor of economics at the University of the Philippines, about one in nine Filipinos now works abroad; these migrants send home over $1 billion a month, a figure that’s growing rapidly. The money comes largely from the U.S., but a lot also comes from Saudi Arabia, Hong Kong, Israel, Brunei and other outposts of the island-nation’s labouring diaspora.
Those “remittances,” as they are called, constitute more than 10 percent of the formal economy—that is, the part transacted through money and counted in the gross domestic product (GDP). All told, migrant workers from developing countries send home well northward of $150 billion each year, which is at least 50 percent more than all the development aid that comes from the First World. What’s more, these figures from the Worldbank greatly understate the true magnitude. The national statistics are spotty and inconsistent. They don’t count the money that expatriates take home with them on visits—Filipina nurses sometimes carry thousands of dollars—or the hulking balik bayan (“going home”) boxes that Filipinos send often.
This flow is not really new. What is now the Bank of America—one of the largest banks in the U.S.—began in San Francisco as the Bank of Italy, in part to help Italian immigrants send money home. But the amounts involved today are unprecedented, and most economists applaud. The labour migrations and resulting transfers of money are the invisible hand at work, they say. There are no bureaucrats, just pure market forces. And the money is “counter-cyclical,” meaning it increases when times get harder. As a development strategy, in terms of the prevailing model, this is about as good as it gets.
Except that it’s not. The remittances do pay for food and clothes, school tuition and medical treatment for family members back home. Often these workers can buy homes and land. Kids do get trips to the mall. But the very poor get little benefit, since it usually takes money and education to find work abroad.
Ask a Delia Fabillon, moreover, and you will find that the advantages come at a price of personal tragedy and social dislocation. The way the global economy is constructed, not much of the cash turns into local development of the kind that would make these worker migrations less necessary. Much of it heads right back out again to the First World from which it came.
Last year, on a visit to my wife’s family rice farm in the Philippines, our son, who was 3, became very sick. His fever soared. We spent a hot sleepless night, and then drove the dusty roads to a provincial hospital where we stayed for three days. It was clean and adequate. The doctor was a kind man who relied more on touch than on the lab tests so prevalent in the Western world.
We felt we were in good hands, except for one thing. Every nurse except for one—the supervisor—seemed to be just out of nursing school, and it showed. The reason is that so many of them are going abroad—15,000 nurses a year from the country as a whole. The number of nursing schools in the Philippines has mushroomed from 40 in the 1970s to some 400 now. But still they cannot keep up with the pump drawing graduates abroad.
The Philippines’ trade in human labour actually began in the 1970s. There was a desperate need for oil-field hands in the Middle East, and the country—where Ferdinand Marcos was then the president—had a corresponding need for foreign exchange. Soon Filipinos were heading off to Saudi Arabia, Kuwait and other countries where oil-field work is deemed beneath the dignity of locals. My wife’s father spent six years in “Saudi,” as Filipinos call it, to send his kids to college.
Soon it was housekeepers to Hong Kong, factory workers to Taiwan, nurses to Canada and the U.S., “bar maids” and entertainers to Japan and merchant seamen everywhere. Today, more than 150,000 Filipina amahs (housekeepers and nannies) work in Hong Kong alone. The training and processing of these human exports has become a major industry. One of my wife’s cousins taught Hebrew in the provincial capital of Iloilo, to young women who were going off to work as housekeepers in Israel.
Human export is a bustling trade, and a boon to the nation’s GDP. But for the people involved it is not a walk in the park. Housekeepers in the Middle East are often abused. In Lebanon, many were left behind in sectarian turmoil by wealthy employers who themselves fled. When I asked a man in my wife’s village about working abroad, he showed me the stump of the finger he lost in a factory in Taiwan. He never got a cent in compensation.
Not all suffer such fates, of course. Some welcome the escape from poverty and unrelenting heat. The larger problem is what happens to a country when so many of its productive people leave. For one thing, in the Philippines the medical system goes too.
It turned out that we were lucky. At least there were nurses, and a hospital. Elsewhere in the country, hospitals are closing for lack of staff. In the province of Negros Occidental, close to half the doctors have retrained as nurses or are in the process of doing so, so they can come to the U.S. and make 10 times more money. Lawyers and accountants are retraining to become nurses too. Schoolteachers are leaving to become amahs in Hong Kong where they make 15 times more.
Many of the women are mothers like Delia Fabillon, and this has become almost commonplace. When one of my in-laws left her husband and four kids in the village to work in Brunei, the family’s response was the fatalistic shrug with which Filipinos have much practise.
Some studies contend that the children in such households do fine in terms of schooling and achievement. That hasn’t been Fabillon’s experience. Her eldest floundered in school and ran away from home. The next-eldest got pregnant right after graduating from high school. “They turned out to be what I didn’t expect them to be,” she said. The youngest daughter, meanwhile, wouldn’t look at her when she came back. As Fabillon told me this, she started to cry. “I’m good at hiding my feelings,” she said. “But deep down there is hurt.”
That hurt is widespread in the Philippines these days. Many kids get derailed. Marriages fall apart. According to recent news reports, incest is on the rise. Fabillon considers herself lucky. She has friends working overseas whose children won’t listen to them at all. “Why should I?” the children say. “You didn’t take care of me.” Somehow these mothers must transfer their affection for their own children to the privileged ones they as nannies are raising. U.S. sociologist Arlie Hochschild calls this “the female underside of globalization.” First we extracted the Third World’s rubber and sugar; now it’s mothering and care.
The process of migration tends to feed upon itself. As more leave, more think about going. People are asking, as one newspaper columnist put it, “Why would anyone want to stay?”
For those who do stay, there is dependence on the monthly remittances. But opportunity is scarce, and the remittances, for all their potential, are not doing much to change that. One reason is that there are so many hands in the pot, starting with the exam companies, placement agencies and the rest that have glommed onto the human-export trade. Then there are the remittance fees. Banks and transfer companies like Western Union (the biggest) have charged an average of 10 percent. That means that of the $12 billion Filipinos send home each year, the money changers take a $1.2 billion cut.
A deeper problem is embedded in the current operating system of the global economy. The intellectual-property regime that the U.S. has pushed around the world is an example. The Philippines has the highest pharmaceutical prices in Asia, and a major reason is that the government there has obliged the U.S. regarding patent laws.
When Filipino expats send money back to their families for medical treatment—as my wife and I have done numerous times—much of it goes into the cash drawers of U.S. pharmaceutical companies. Many Filipinos don’t get drugs at all. As one of my wife’s sisters put it, “They have a choice between going broke and dying, and so they die.”
The remittance money comes with an elastic cord that pulls much of it right back, and the mega-malls are shrines to this phenomenon. According to newspaper reports, most of the money spent there comes from relatives overseas. Traditional food vendors with pansit and inasal stands are tucked away on upper floors if they exist at all. Burger King, Pizza Hut and JolliBees, a local chain, have the prime locations down below. These are outposts of the global economy more than they are outgrowths of the Philippines itself.
This is a losing game; and it won’t change until the country’s leaders find a way to channel more remittance money into genuine grassroots development. There are signs that this could happen. Expats in the U.S. and elsewhere talk often of returning home. They miss their extended families and the slower pace. The dollars they have saved, and the Social Security they have earned, would enable them to live well. Then, too, a movement is afoot to reroute the financial wiring of overseas labour so that more remittance money gets invested locally and a little less gets spent at the mall.
Filipinos have a genius for improvisation, and for conjuring sufficiency out of unpromising material. Perhaps most important, an idealism has arisen among young people that is countering their desire to get out. Mikaela Fudolig, the valedictorian at the University of the Philippines, this year gave expression to a thought that weighs heavily on the nation’s psyche.
“It will take bravery to gamble your future by staying in the country and try[ing] to make a prosperous life here,” she said. Her exhortation to excellence had a telling national twist, but I suspect she spoke for much of the developing world as well. Her generation must seek to excel, she said, so that “others will see us as a nation of brains of the highest quality, not just of brawn that could be had for cheap.”
Jonathan Rowe is a fellow at the Tomales Bay Institute, which explores issues involved with protecting and promoting the commons. www.onthecommons.org