CHAPTER 1
DEVELOPMENT
REAL CONCEPT OF
- Its about growth and helping to
DEVELOPMENT grow different aspects, as
together they create further
growth
BASIC ECONOMIC PROBLEMS - Vital in today’s society as it
affects every aspect in
Low to moderate economic growth everyday life
for the past 40 years - A progressive process and it
Low growth elasticity of poverty involves interaction of different
reduction factors
Weakness in employment
generation and the quality jobs ECONOMIC DEVELOPMENT
generated
- A progressive process of
Failure to fully develop the
improving human conditions,
agriculture sector
such as the reduction or
High inflation during crisis periods
elimination of poverty,
High levels of population growth
unemployment, inequality and
High and persistent levels of
illiteracy.
inequality, which dampen the
positive impacts of economic Economic ------ Capital,
expansion Technology, Market
Recurrent shocks and exposure to
risks such as economic crisis, Non-Economic ------ Culture,
conflicts, natural disasters, and Religion, Government, Education
“environmental poverty”
3 CENTRAL PROBLEMS OF AN
ECONOMIC ECONOMY
- Concerned with the What to produce and in what quantity?
organization of the money,
How to produce?
industry, and trade of a
country, region or society.
For whom to produce?
ECONOMICS
6M’s
- Helps people understand the
Money
world around them Moments
- Enables people to understand Materials
people, businesses, markets Machines
and governments Methods
Man Power
- Saudi Arabia, Tunisia,
Bahamas, Peru, Paraguay,
Labour Intensive Techniques (LIT)
Panama, Suriname
- More units of labor in
3 ECONOMIC SYSTEMS
production to capital are used
in the production process. 1. Communism (command
system)
Capital Intensive Techniques (CIT)
- economic system where the
- Involves more capital and less government owns most of the
utilization of labor factors of production and
decides the allocation of
DEVELOPED COUNTRIES resources and what products
and services will be provided.
- country—also called an
- most important originators of
industrialized country—has a
communist doctrine were Karl
mature and sophisticated
Marx and Friedrich Engels
economy
- Russia and China, decided on
- usually measured by gross
a centrally planned
domestic product (GDP) and/or
economy (aka command
average income per resident.
economy)
- advanced technological
- Major attributes, The
infrastructure and have diverse
government owns all means of
industrial and service sectors.
production
- Luxembourg, Netherlands,
Iceland, UK, Denmark,
2. Capitalism (market system)
France, Canada, Sweden
- each individual or business
works in its own interest and
ECONOMIES INTRANSITION maximizes its own profit based
on its decisions.
- countries which are undertaking
macroeconomic reforms in an Pure Capitalism
attempt to alter the ways in
- laissez-faire capitalism, the
which their economies are
government's role is restricted
managed.
to providing and enforcing the
- North Macedonia, Ukraine,
rules of law by which the
Russian Federation, Belarus,
economy operates, but it does
Albania, Montenegro
not interfere with the market.
- Laissez-faire means “let it
be”
DEVELOPING ECONOMIES BY REGION - essential characteristics,
- a country with a low human factors of production are
development index, less privately owned,
growth, poor per capita income, - economic transactions take
and more inclined toward place in markets
agriculture-based operations - consumer sovereignty is
rather than industrialization and what effects the efficient
business. allocation of resources.
- main benefit of capitalism is 2. The equitable distribution of the
the promotion of competition fruits of economic development;
- plutocracy, where the wealthy and
rule the economy for their own 3. The achievement of total human
benefit. development for every Filipino.
3. SOCIALISM
3 OBSTACLES OF DEVELOPMENT
- distinguished as an economic
system between communism
and capitalism
- the social and economic 1. DEFICIENT IN CAPITAL
doctrine that espouses public - They cannot afford to buy
over private ownership and sufficient modern tools of
control of property and natural production.
resources
- socialism seeks to redistribute 2. POPULATION EXPLOSION
the wealth more equitably by - Birth rate is much higher than
the communal ownership of rich countries
natural resources and major - Every year more persons are to
industries be fed and employed.
- unlike communism, most small
or nonessential enterprises 3. MAN HIMSELF
would remain privately owned. - Before improving his physical
Also unlike the Communists, environment, he should be the
most socialists do not advocate first to be improved – his
violence or force to achieve attitudes and values.
their economic system.
3 STAGES OF GROWTH
PHILIPPINE DEVELOPMENT
OBJECTIVES ( COLIN CLARK )
Institutional Reforms
- Agrarian Reforms STAGE 1: AGRICULTURE
- Cooperative Development
- Principal source of employment
- Human Settlements
and income
- Banking Reforms
Top priority
STAGE 2: MANUFACTURING
- Equitable distribution of wealth INDUSTRY
and income
- Food production
- Employment - Becomes major economic
activity as a country develops.
3 BASIC OBJECTIVES
STAGE 3: SERVIVE INDUSTRIES
( Prime Minister Cesar Virata )
1. The attainment of economic
stability;
- Grow to be dominant feature of fall ill, and die from the effects of
the economy as a country malnutrition.”
develops further.
BABEUF, a FRENCH UTOPIAN, SAID:
“ Every man has an equal right in
TWO DIFFERENT WORLDS the enjoyment of all goods based
on the laws of nature.”
NORTH CHAPTER 2
- Rich world
- More than 90% manufacturing
IDEAS AND THEORIES
industry is located to north
OF ECONOMIC
SOUTH DEVELOPMENT
- Poor wold
- Consumers of the finished
products of the north.
ECONOMIC IDEAS AND
THE DOCTRINE OF ROSTOW
THEORIES
( PROFESSOR W.W. Rostow )
- are generally the products of
existing conditions.
STAGES OF ECONOMIC GROWTH ANCIENT ECONOMIC IDEAS
1. Traditional Society - based on the Holy Scriptures
2. Pre-conditions for take-off and codes of law.
3. Take-off
4. Drive to maturity
5. Age of high mass consumption
PLATO
POVERTY
- Greek philosopher that against
- Product of defective man-made
to the accumulation of wealth
institutions.
through lucrative trade and
commerce.
- Agriculture is very important
CONCEPT OF A JUST SOCIETY and he was in favor of
specialization of production.
- There is a need for diversity of
“ Their young faces express both hope occupations since no person is
and fear. Hope that somehow they will get self-sufficient, and people have
enough food to survive. Fear that like many wants.
millions of other children around the - The Republic, he said that the
world, they will keep going to bed hungry, members are to be educated
from childhood for their
responsibility, and they are to - Influenced much the growth of
be chosen through competitive capitalism.
examination. - They asserted the supremacy of
- There is no gap between the the state over all other sources
rulers and ruled because the of powers, including church.
former are not allowed to own - Claimed that manufactured
properties, except for what is products could be sold readily
necessary to support them. abroad than agricultural
products.
- Stated that agricultural goods
are perishable and bulky.
ARISTOTLE
FRANCIS DRAKE
- Likewise stressed the value of
management of agriculture. - Notorious English pirate,
- He disagreed with plato about specialized in capturing the
communal property ships of other countries located
- Claimed that this is not feasible with gold.
and that is destroys individual - Hero of England
incentives.
THOMAS MUN
XENAPHON - Provided the ways of achieving
- Classmate of plato, in favor favorable foreign trade.
of capitalism. - He contributed in the idea of
- Proposed that the government balanced payments.
should promote trade and - Foreign trade is favorable
shipping exports are greater than
- He also encouraged the exports.
formation of more silver mining - His writings dominated the
companies to increase general whole concept of mercantilism
wealth. in Europe.
- He was in favor of joint-stock
companies, specialization, and PHYSIOCRACY – RULE OF NATURE
division of labor.
- Philosophers claimed that
- Considered agriculture as basic
people are poor because they
wealth.
violated the laws of nature.
St. THOMAS AQUINAS - An economy or society that
conforms to such laws would be
- He preached distributive justice successful, according to the
and compensatory justice. thinkers.
- Condemned usury and other
unfair practices of capitalism. WEALTH CAME FROM THE LAND
- PHYSIOCRACY, they
THE ECONOMIC DOCTRINES OF explained that people could not
MERCANTILISM exist without food and natural
resources.
MACHIAVELLI & SERA - Farmers, the backbone of the
whole national economy.
PHYSIOCRATS - He noted that improvements in
transportation can promote
- To them favorable trade only
growth of commerce and
drained the resources of the
industry.
country, because it gave more
- Theory of Smith is based on
goods that it received.
Industrialization and not on
- Argued that their country
agricultural development.
should return to agriculture.
CONDITIONS FOR INCREASING
WEALTH OF NATION
- Size of the Market
LAISSEZ FAIRE THEORY - Labor Efficiency
- Total Population
- French term and it was
introduced by the physiocrats. THEORY ON POPULATION
- It connotes non-interference,
THOMAS MALTHUS
liberty or freedom
- It means the government - Religious minister, saw the
should not intervene in growth of population and
economic affairs. human miseries
- Stated that population
QUESNAY
explosion is the root cause of
- Leader of physiocrats the problems of society.
- Stated that prices of - Said that the rate of population
manufactured goods are higher growth is higher than the rate
that the prices of their raw of food production.
materials.
THE THEORY OF COMPARATIVE
THE CLASSICAL THEORIES ADVANTAGE
ADAM SMITH DAVID RICARDO
- Real founder of the classical - One of the classical
school of economics economists, developed the
- He became professor of moral theory of law of comparative
philosophy at Glasgow advantage.
University. - Based on his theory, nations
- Wealth Nations, it explains should export the goods
how wealth of the nation is which they enjoy the
created and distributed, greatest advantage, and
became the BIBLE OF should import the goods
ECONOMICS. which they have the
greatest disadvantage.
- Simply means – do not produce
PRODUCTION IS THE REAL WEALTH product if it is cheaper to buy
it.
- According to Smith, the only
- Thus, a product which takes
source of wealth is production
more hours or days in
through labor and resources.
producing has a higher price or
value than a product with lesser
hours of producing it.
THEORY OF KARL MARX
- He only qualified his theory of
value by emphasizing that labor
must be socially necessary.
- He claimed the benefits of
production go to the capitalists
and not to the workers.
