Module 1 Economic Growth: Increase in real GDP

The Meaning and Concept of Development

Nominal GDP
Development - Gross Domestic Product (GDP)
 Development is a multidimensional undertaking - Refers to the value of all goods and services
to achieve a higher quality of life for all people. – produced domestically
UN Real GDP
 Development is to lead long and healthy lives, to - “Real” means
be knowledgeable, to have access to the - Adjusted for inflation
resources needed for a decent standard of living - Measured in constant prices
and to be able to participate in the life of the
community. – UN Development Programme
 Development is process of improving the quality
of all human lives with three equally important
aspects as follows (Todaro, 2015): basic needs,
self-esteem, and freedom.

Economic Growth: Higher Income Output

Gross National Income (GNI)

- Gross national income (GNI) is a measure of the total
GDP does not include: income earned by residents of a country or region
1. Intermediate goods each year. It is calculated as GDP plus net income
2. Non-market activities received from abroad, plus taxes (minus subsidies) on
3. Illegal/underground activities production.
4. Second-hand sales (used goods)
5. Purely financial transactions
6. Imports
Per capita income = yearly total income/population

GNI per capita is GNI divided by population.

 Diversified Economy
Net Primary Income (NPI) - A diversified economy refers to an economic system
- Net primary income is the net balance of that includes a variety of industries and sectors,
receipts and payments of employee reducing dependence on any single source of
compensation of nonresident workers and income.
investment income between a nation and the
rest of the world. Investment income includes
direct investment, portfolio investment, Rostows’s Stages of Growth
receipts on reserve assets, and other According to Walt Rostow, the transition from
investments. underdevelopment to development can be described in terms
- The money a country’s people earn from of a series of steps or stages through which all countries must
abroad (like salaries of OFWs, interest proceed (Todaro & Smith, 2020)
dividends) minus the money paid to foreigners
working or investing in the country.
Gross National Income (GNI) Income from abroad minus Income sent abroad
- Halaga ng mga produkto at serbisyo na nagawa GDP + NPI = GNI
ng mga mamamayan ng isang bansa.
Gawa Economic Development: Increase in living
Natin standards
Ito
Standard Living
Gross Domestic Product (GDP) - The standard of living is a measure of the
- Halaga ng lahat ng tapos na produkto at serbisyo material aspects of a national or regional
na ginawa sa loob ng bansa economy. It counts the amount of goods and
Gawa services that are produced and available for
Dito sa purchase by a person, family, group, or nation.
Pilipinas - GDP per capita

GNP vs. GDP

Economic Diversification
Gross National Product (GNP) is an estimate of the - Economic diversification is defined by the Traditional Society
total value of all the final products and services United Nations as “the process of shifting an - Agricultural economy
produced in a given period by the means of production economy away from a single income source - Simple life but a happy life
owned by a country’s residents. toward multiple sources from a growing - Produce enough for their
range of sectors and markets.” needs
Gross Domestic Product (GDP) is the total market - NO effort for economic
value of all finished goods and services produced within growth
a country in a given time period.
 - Lewis argued that the driver of capital accumulation
Age of Mass was a sectoral movement of the factors of production
Pre-Conditions for Take-Off Consumption abundant in developing countries, labor, from the
- Agriculture becomes more - Mass production leads to ‘traditional’ or ‘non-capitalist’ sector (of low productivity,
mechanized mass consumption low wage, priced to average product not marginal
- More outputs are traded - Consumerism and product, and thus with widespread disguised
- From self-sufficient to a materialism unemployment) to the ‘modern’ or ‘capitalist’ sectors (of
simple trading business - More innovation and higher productivity and where wages are set by
- They seek external funding investment productivity in the subsistence sector).
for their investment to expand
their businesses

Take- off Stage

- Industrialization begins to
occur
- Manufacturing industry
- More trading activities
- Savings and investment
grow
- Start of dual economy Rural
- Rural areas are in the countryside. There are not many
Lewis’ Theory of Economic Development people, and there are lots of open spaces like farms and
 It was formulated by Nobel laureate W. Arthur forests. You usually need a car to get around.
Lewis in the mid-1950s Urban
Drive to Maturity Stage - Urban areas are cities. They have lots of people, tall
- Demand for external The underdeveloped economy consists of two buildings, and a busy feel. There are many jobs and
finance sectors: things to do, and you can often get around without a
- increase use of 1. Traditional, overpopulated rural subsistence sector car.
technology with surplus labor Suburban
- diversification 2. Modern high-productivity modern urban industrial - Suburban areas are neighborhoods right outside of a
- export and import sector into which labor is transferred city. They have more houses, less people, and more
space. People who live here often drive to the city for
work.
Neocolonial Dependence Model
Malaysia has broadened its agricultural industry away
Neo – new or recent from mainly rubber to become one of the world’s
biggest palm oil producers.
Colonialism – domination of people or are b a foreign
state or nation
Chile leveraged its previously local-only salmon
- The neocolonial dependence model is a model sector to become a leading exporter of the fish,
whose main proposition is that accounting for over a quarter of the planet’s
underdevelopment exists in developing production.
countries because of continuing exploitative -
economic, political, and cultural policies of former
colonial rulers toward less-developed countries.
- Underdevelopment – an economic situation
characterized by persistent low levels of living

Market Fundamentalism
 “Market Fundamentalism” was coined by a Nobel
Prize winner and former chief economist of the
World Bank itself – Joseph Stiglitz
 Also known as “free market fundamentalism”
 According to this approach, underdevelopment 1 in 3 (31%) saying QL is improved
is the result of too much government 38% - stayed the same
intervention in developing countries. 30% - it got worse
MODULE 3
THE PHILIPPINE DEVELOPMENT PLAN (2023-2028)

Vision
for the

AmBisyon Natin 2040 is a

picture of the future, a set of The PDP 2023-2028 is the second
life goals and goals for the medium-term plan to be anchored
country. It is different from a on the 8-point socioeconomic
plan, which defines the agenda and is geared towards
strategies to achieve the goals. It is economic and social transformation
like a destination that answers the question to reinvigorate job creation and
“Where do we want to be?”. accelerate poverty reduction through
A plan describes the way to get to the destination; inclusive economic growth.
AmBisyon Natin 2040 is the vision that guides the future The PDP 2023-2028 is in line with
and is the anchor of the country’s plans. #AmBisyonNatin2040 which
articulates the Filipino people’s
collective vision of Matatag,
The Life of all Filipinos by 2040 Maginhawa, at Panatag na Buhay
Matatag, Maginhawa at Panatag na Buhay Para sa Lahat.
Ito ang plano para sa sama-samang
By 2040, Filipinos enjoy a strongly rooted, comfortable, pag-unlad. Pagtulungan nating
and secure life. In 2040, we will all enjoy a stable and ipatupad!
comfortable lifestyle, secure in the knowledge that we
have enough for our daily needs and unexpected
expenses, that we can plan and prepare for our own
and our children’s future. Our family lives together in a
place of our own, and we have the freedom to go where
we desire, protected and enabled by a clean, efficient,
and fair government
FACTORS CONSIDERED IN THE FORMULATION OF
THE PHILIPPINE DEVELOPMENT PLAN Geopolitical Trends
(2023-2028)  Ongoing international tensions – Russia–Ukraine
1. Health and Social Trends conflict
2. Economic Trends  Shifts in Asian investments and manufacturing – shifts
3. Geopolitical Trends of investments from China to Southeast Asia
4. Environmental Trends
5. Technology and Regulations
Environmental Trends
 According to the World Meteorological
Health and Social Trends Organization, economic losses from weather-
 Continued impact of COVID-19 – health crisis related disasters increased sevenfold from the
 China’s dynamic Zero-COVID policy – imposing 1970s to the 2010s.
unpredictable lockdowns to curb COVID risks  In the 2021 Glasgow Climate Pact during the 26th
 Aging global population – Up to two-thirds of the United Nations Climate Change Conference, more
world’s population aged 60 years and over will be commonly referred to as COP26,22 almost 200
accounted for by low- and middle-income countries in countries committed to make the 2020s a decade
2050 of climate action and support.
 Increasing demand for health care workers – salary  Industrial countries have pledged USD100 billion
differences of healthcare workers between the annually for developing countries, with the goal of
Philippines and other countries reducing emissions and capping the global
average temperature rise to 1.5 degrees.

Economic Trends
 Headwinds in global economic recovery – the world Technology and Regulations
economy is still struggling to get back on track  Rapid digitalization across the globe – various
 The International Monetary Fund (IMF) countries were able to tap their domestic industries
forecast global growth in 2022 at 3.2 percent, for innovation and repurposing to help in the
a significant decline from the 6 percent whole-of-nation effort to respond to the pandemic
rebound posted in 2021.  Global megatrends for 2030 – evolving digital and
 Global growth is expected to fall further to 2.7 technological landscape of the Fourth Industrial
percent in 2023, with a 25 percent probability Revolution or Industry 4.0
that it could fall under 2 percent.
 Total global debt rose by 30 percentage points
of world GDP in 2020
MODULE 4 Expenditure Approach Income Approach
INDICATORS OF ECONOMIC DEVELOPMENT - The expenditure approach adds up the value of - The income approach sums the incomes
purchases made by final users. generated by production.
- For example, the consumption of food, - For example, the compensation employees
Economic Indicators of Economic Development televisions, and medical services by households; receive and the operating surplus of companies
the investments in machinery by companies; and (roughly sales less costs).
Gross Domestic Product (GDP) the purchases of goods and services by the GDP = Total National Income + Sales Tax +
- Production (Value-added) approach government and foreigners. Depreciation + Net Foreign Factor Income
- Expenditure approach Where:
- Income approach GDP = C + I + G + (X-M) Total National Income=Sum of all wages, rent, interest,
Where: and profits
C is the consumer spending on various goods and Sales Taxes=Consumer taxes imposed by the
Gross Domestic Product (GDP) services government on the sales of goods and services
- GDP measures the monetary value of final I signify the investments by businesses Depreciation=Cost allocated to a tangible asset over its
goods and services—that is, those that are G represents the government spending on goods and useful life
bought by the final user—produced in a services Net Foreign Factor Income=Difference between the
country in a given period of time (say a quarter X is the gross exports total income that a country’s citizens and companies
or a year). M represents gross imports generate in foreign countries, versus the total income
- If a German-owned company has a factory in the foreign citizens and companies generate in the domestic
United States, the output of this factory would be country
included in U.S. GDP, but in German GNP.

Non-Economic Indicators of Economic Development

Production (Value-Added) Approach
- The production approach sums the “value-added” 1. Levels of absolute poverty
at each stage of production, where value-added 2. Malnutrition levels
is defined as total sales less the value of 3. Literacy rate
intermediate inputs into the production process. 4. Average life expectancy
- For example, flour would be an intermediate input 5. Openness of economy to international trade
and bread the final product; or an architect’s 6. Quality of nation’s infrastructure
services would be an intermediate input and the 7. Share of agriculture in economy
building the final product. 8. Political stability and security

GDP = C + I + G + (X-M)
Where:
- C is the consumer spending on various goods
and services
Levels of Absolute Poverty Basic literacy is defined as the ability of a person to Countries ranked by life expectancy
- Development exists if the population with income read and write a simple message in any language or
less than minimum meets basic necessities of dialect with understanding, and to compute or perform
life. basic mathematical operations.
- Self-Rated Poverty Threshold Functional literacy is the ability of a person to read,
P20,000 P12,000 write, compute and comprehend. In addition to the basic
Metro Manila Others literacy skills, functional literacy includes higher level of
Source: comprehension skills, such as integrating two or more
Social Weather Stations (SWS) survey from June pieces of information and making inferences based on
25 to 29, 2025 the given information.
Source: Worldometer, 2025

Malnutrition Levels “There are approximately 5.8 million people who are
- Percentage of population with insufficient food – not basically literate…If you look at functionally Openness of Economy to International Trade
levels of malnutrition. illiterate, there are 24.8 million who have problems - International trade expands consumption
- This is considered as an indicator because the comprehending…This is the gravity of our situation possibilities because a wide array of commodities
productivity of human capital is much dependent right now, and I support the new definition [of are made available for consumption that will pave
on the physical condition of the people. literacy] because now we have a good picture of the way to economic development.
Philippines where we are”, Gatchalian said.
1 in 2 children under 5 are food poor Philippines
Source:
UNICEF, July 2025 Average Life Expectancy
- Life expectancy generally rises with economic
development.
- It indicates that individuals born in wealthier
countries, on the average, can expect to live
Source: longer than those born in poor countries
World Population Review, 2025 (Biciunaite, 2014).
Philippines
Literacy Rate 70.7 years old
- The percentage of a population that can read and Female – 73.11
write. Male – 67.1
- The higher the literacy rate is, the higher is the Source: Worldometer, 2025
development rate. Source: BSP, 2024
Philippines
For every 10 Filipinos, 9 have Basic Literacy,
while 7 have Functional Literacy
Source:
PSA, April 2025
Quality of Nation’s Infrastructure Political Stability and Security
- quantity and quality of roads, railways and - Countries with more stable and secured political
airports system have greater chances of developing.
- It indicates that infrastructure investment can
boost economic growth by increasing the
potential supply capacity of an economy
Philippines
Target spending –
5% to 6% of GDP from 2022-2028
Source: BSP, 2025

Source:
World Population Review, 2025

Share of Agriculture in Economy

Philippine agricultural sector

9% of GDP (PSA, 2024)

25% of workforce (PSA, 2024)

agricultural trade totaled USD 24.35 billion, but

imports constituted a staggering 73.6% of this figure
(DA, 2024)

₱167.5 billion budget (DBM, 2024)

 CHARATERISTICS OF LESS-DEVELOPED
COUNTRIES
1. Predominance of agriculture
2. Income is inequitably distributed
3. Low per capita income and widespread poverty
4. Shortage of capital
5. Population explosion and high dependency ratio
6. Massive unemployment
7. Unproductive investment
8. Low levels of productivity

Source:
World Population Review, 2025