Professional Documents
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Economic Institutions
Economic Institutions
Objectives
At the end of this lesson, you should be able to:
How many gifts have you received recently? Is it expected for you to
return a favor? Why or why not?
The term economic institutions has a broad meaning. Let us find out.
Reciprocity
What is reciprocity?
In Sociology
It is defined as the a system of voluntary exchange between individuals based
on the understanding that the giving of favor by one will in future be
reciprocated either to the giver or someone else.
Example:
Filipinos practice utang na loob. This act is part of our culture. When a person
showed you an act of kindness or favor, it is a must for Filipino to return the
favor.
In Economics
It is defined as an exchange of equal advantages.
Example:
Types of Reciprocity
What are the types of reciprocity?
1. Generalized
Generalized reciprocity is giving out of something without the anticipation of an
instant return.
Example:
When a friend gave you a birthday gift, it is not expected that you will also give
that friend a gift in return on the same day, although it is anticipated that you
will give him a gift or token sometime in the future or when his birthday comes.
2. Balanced
Balanced reciprocity is giving out of something with the anticipation of
immediate return.
Example:
When you get something from the store and walks out without paying for the
goods, you will be stopped by the shop employees because you have not
reciprocated with money the goods that you picked from the store.
3. Negative
Negative reciprocity occurs when the exchange of something already involves
taking advantage of someone or the situation. Most of the time, this type of
exchange involves trickery, intimidation, or hard bargaining.
Example:
We have
learned in
Chapter 2
that the
economic
institutions involve activities such as producing, generating, distributing, and
purchasing goods and services. These activities have an impact on the global
community.
Legends:
Practical Application
Reciprocity always necessitates adequacy of response but does not mean that it
should be of the same amount or volume. More than of economic gain,
reciprocity is more of a social benefit. We have to make use of this principle to
bring us closer to our neighbors, friends, family, and loved ones.
Try it! Compare and contrast generalized from balanced reciprocity. Give
examples.
What do you think? How does negative reciprocity affect the activities of
different economic institutions? What do you think will be the impact of these
on the global community?
Keypoints
Generally, “Economic Institutions” refers to the network of commercial
organizations that determine how goods and services are produced,
generated, distributed, and purchased.
In sociology, reciprocity is defined as the a system of voluntary
exchange between individuals based on the understanding that the
giving of favor by one will in future be reciprocated either to the giver or
someone else.
In economics, reciprocity is defined as an exchange of equal
advantages.
There are three types of reciprocity: general, balanced, and negative.
The activities of the economic institutions play a vital role in shaping and
maintaining the stability of the global community.
More than of economic gain, reciprocity is more of a social benefits.
Objectives
At the end of this lesson, you should be able to:
Review!
Economic Institutions
the popular and thriving arrangements and structures that are part of
the culture or society.
Examples:
Taxes
Social security
Private pension benefits
Housing
Health care
Transfer payments can originate from either government or business sources.
Business transfer payments include corporate gifts to non-profit institutions,
payments for personal injury, and taxes paid by domestic corporations to
foreign governments. Far more important, both, in terms and policy
significance, are transfer payments originating from government sources.
Among the government agencies that received the highest allocations are:
In the
circular
flow of the
economy,
household
s and
firms pay
taxes to
the
governme
nt; in
return,
the
governme
nt
distribute
s transfers
in the
forms of services to the household and subsidies to the firms.
Explore! Imagine that the Philippine government is doing its job in solving the
rampant problem of smuggling. More taxes are collected, local and foreign
industries are protected. In the end, more effective and efficient services are
provided to the people. How do you connect this scenario to the topic?
Try it! If you will become a wealthy individual in the future and willing to
share part of your fortune to others, which among the basic needs (food,
housing, education, health) will be your priority? Justify your answer.
What do you think? Why many Filipino families still don't have access to
essential goods and services to support their everyday living?
Keypoints
Economic institutions are sectors of the economy that provide goods
and services to the people.
One of the activities of different economic institutions of a particular
country is to provide transfers.
Transfer or transfer payment is a redistribution of income or resources
in the market system.
The circular flow of economy helps explain the interrelationship of
different sectors of the economy.
Government and private enterprise play a major role in the economy.
The activities of economic institutions of a particular country have a
great impact on the global community.
Economic Institutions: Redistribution
Objectives
At the end of this lesson, you should be able to:
Review!
Economic Institutions
the popular and thriving arrangements and structures that are part of
the culture or society.
In relation to Sociology
Redistribution is an everyday activity of societies. Members of the society
contribute by giving their goods that would be collected by the head of the
community followed by a distribution of the goods among the members.
Example:
A) Church tithes
The church acts as the central organization that pools the goods donated by its
members in the form of tithes or donations. The church manages these tithes
and donations for the maintenance of the church itself and its projects and
programs in which most of the time, its members are the recipients. By that
process, the tithes or donations given by the members are being redistributed
to them, especially the less fortunate members.
B) Potlatch
Example:
In our society today there are rival companies. Let us consider these companies
as the rival groups of Native Americans. Company A releases one product to
the market; the Company B will try to surpass that product by releasing their
product better than the product of the Company A.
In relation to Economics
Redistribution refers to the collection of goods and services of the people and
groups to be given by a central authority for allocation.
Example:
Taxation
Example:
In the United States, redistribution happens after each ten years census. The
state legislature approved most states' legislative district redistributions. The
highest court rulings require that congressional districts have roughly equal
populations.
Learn about it! Economic Institutions, Redistribution, and the Impacts on the
Global Community
Try it!
Keypoints
“Economic Institutions” refers to the network of commercial
organizations that determine how goods and services are produced,
generated, distributed, and purchased.
About Sociology, redistribution is the system of exchange that involves
the centralized collection of products from members of a group followed
by the distribution of those goods among the members.
With Economics, redistribution refers to the collection of goods and
services of the people and groups to be given by a central authority for
allocation.
Concerning Politics, redistribution is the process by which electoral
districts are added, removed, or changed.
Potlatch is a ceremonial distribution of property and gifts by the donor
according to the social rank or status of the recipients.
Taxation is the process where the government collects taxes from the
people to turn into social services for the people.
Church tithes are the donations that are given to a religious institution
to be used for its programs and projects.
A redistribution is a form of reciprocity. It differs from mere reciprocity,
which is a back-and-forth two-party exchange.
The activities of the economic institutions play a vital role in shaping and
maintaining the stability of the global community.
Family, as the smallest unit of the society, performs redistribution.
Objectives
At the end of the lesson, the student should be able to:
What is a market?
What is market transaction?
How does market and market transactions affect the lives of people in a
society?
Market Structures
Market Transactions
Measuring the total output of the economy or the GDP of the country
thereby becoming one indicator of growth and development of a society
Providing the basic data that are used by economic planners and
forecasters
Types of Markets
There are different market types. Each one has unique charateristics and
function
Physical Markets
This is a set up where buyers can physically meet the sellers and purchase the
desired merchandise from them in exchange of money. Shopping malls,
department stores, retail stores are examples of physical markets.
Auction Market
In an auction market the seller sells his goods to one who is the highest bidder.
Black Market
This is a setup where illegal goods like drugs and weapons are sold.
Knowledge Market
This is a set up which deals in the exchange of information and knowledge
based products.
Financial Market
This market deals with the exchange of liquid assets (money). Financial
markets can be firther categorized following types:
Explore! Imagine yourself in a street where lots of goods are being sold in a
lower price, will you still buy these goods even though you’re aware that these
goods are counterfeit and pirated? Will still be patronizing them?
Try it!
Make a very simple business plan whereby you will be producing a unique
product to be sold in a monopolistic market.
Objectives
At the end of this lesson, you should be able to:
Review!
Economic Institutions
the popular and thriving arrangements and structures that are part of
the culture or society.
Let us analyze these four competing economic models and their impact on the
world community. It is notable that if the government together with the private
corporations and multinational companies has to join hands in uplifting the
lives of the people, protecting and preserving the environment, and create a
caring society, this world will be a better place to live.
Keypoints
Objectives
At the end of the lesson, you should be able to:
There are non-state institutions that play a vital role in the economy because
they are the one providing the needs of the people in which the government
cannot provide but with a corresponding price or payment for their services.
Banks receive the savings and other deposits of their clients so that these may
be loaned out to borrowers.
Example: Juan dela Cruz has Php10,000.00, which he has saved from his
salary as a manager. He deposits it in Maharlika Bank, which offers a 2%
interest per year; meaning, if he does not withdraw any of his savings, he will
get 10,000.00 + 2% = 10,200.00 after one year. Now, Mr. Entrepreneur needs
7,000.00 because he wants to put up a sari-sari store. He borrows
Php7,000.00 form Maharlika Bank. Can you see the flow of money? Juan gets
more than P10,000.00 after a year; at the same time he is able to help Mr.
Entrepreneur put a business. This would not happened without the help of
Mahalika Bank, since Juan and Mr. Entrepreneur do not know each other.
Banks, in the modern sense of the word started during the Renaissance period
in Italy. The word bank traces its origin from the Old Italian word banca which
means table orbench; and is where transactions occur at that time.
The role of a financial institution as a link in the transfer of money from the
source to the borrower is very important to our economy.
Banking Institutions
The Bangko Sentral ng Pilipinas is known as the banks of all banks in the
Philippines. It is the bank responsible for the regulation, creation, and
management of money supply in the country.
Corporations
*Easy to raise funds* – the corporate form is the most effective for raising
money.
Limited liability – is the concept that owners of the business are only
responsible for its debts up to the amount they invest in the business.
Unlimited life – the corporation does not cease to exist if a major
stockholder dies.
Specialized management – big corporations can afford to have
specialized managers to run the business.
Risks are shared – the risks of the business are spread among many
owners.
The following are the disadvantages of corporation as a business organization
in the economy:
Explore
One of the hottest issues now in the Philippine banking industry is the $81
million allegedly stolen from Bank of Bangladesh and laundered in the
Philippines through the banking system and the casinos. What do you think is
the impact of this particular case to the Philippine banking industry and to the
whole Philippine economy. Are you in favor of the on-going investigation by the
Senate about the issue? Will you still trust our banks and big corporations like
casinos operated by wealthy individuals?
Try it!
A portion of your weekly or even monthly allowance be deposited in the bank
and document your experience in opening your savings account in a bank.
What are the different documents that they will be asking from you? Will you
be allowed by the bank to transact with them even if you are a minor?
1. Can MMJ Corporation creditors force Matthew, Mark, and John to turn
over their personal savings and sell their cars to pay the debts? Why or
Why not?
2. Do you think it is fair to the three buddies? Do you think it is fair to the
creditors? Explain.
Key Points
Objectives
At the end of this lesson, you should be able to:
Review!
Non-state Institutions
Trade unions (or labor unions) are voluntary associations of either employees
or employer or independent workers to protect their interest and became an
instrument of defense against exploitation and maltreatment.
are some
examples of trade unions.
As to the Purpose:
###As to Function:
Cooperatives and Trade Unions as Means of Promoting Self-help
Towards Development of the Economy
Trade unions are always fighting for better wages by improving employees pay
and other benefits such as holiday entitlements.
Examples:
Try it! Now, you are aware that cooperatives and trade unions are vital
institutions in the economy that foster self-help and self-reliance. Soon, if given
a chance, what role do you prefer to play, an employee or an employer? Why?
How would you promote the importance of cooperatives and trade unions?
What do you think? We are aware that different kinds of cooperatives and
trade unions were organized and formed in various parts of the country but
still some of their members are struggling every day to meet their needs. What
do you think are the reasons why most of the cooperatives and trade unions
have failed in fulfilling their functions? Are there external factors that
contribute to their failure? What do you thinks are these factors?
Key Points
Non-state institutions refer to institutions that are organized by private
individual or group of people for the purpose of providing services to the
members of the society.
Cooperative is a voluntary organization of persons who have agreed to
pool their resources together to undertake an economic enterprise for the
reason of meeting their everyday needs.
A trade union is a voluntary association of either employees or employer
or independent workers to protect their interest.
The different types of cooperatives are consumer, credit, producer,
marketing, and service.
Examples of trade unions are transport groups, workers welfare
organizations, and employers’ associations.
Functions and purposes of organizing and establishing cooperative and
trade unions are critical in promoting economic development.
Nonstate Institutions: Transnational
Advocacy Groups
Objectives
At the end of this lesson, you should be able to:
Do you know the specific functions and roles these nonstate institutions play
in society?
Learn about it!
There are numerous kinds of nonstate institutions that play roles across
macro-level social concerns. One of these institutions is a transnational
advocacy group which will be discussed and elaborated in this lesson.
Try it! Think of a cause that you are very much interested to advocate. Create
a poster or infographic that tells about your chosen advocacy. You may use
actual drawing materials or online software to create your poster. Be creative in
making your poster. Once finished, you may opt to upload your advocacy
poster in any social media platform.
What do you think? How are transnational advocacy groups able to get
control of information dissemination?
Tips
Transnational advocacy groups are made up of people with the same set
of advocacies and beliefs. Being part of support does not require any
educational or career accomplishment.
Transnational advocacy groups may form networks that span across
countries or continents. This is the reason why they can easily involve
themselves in tackling international issues.
Keypoints
Transnational advocacy groups are networks, not bound by any
national or international border; that defend a cause or proposition.
Transnational advocacy groups make use of political tools such
as information, symbols, leverage, and accountability to ensure the
success of their advocacies.
Transnational advocacy groups may be made up of non-government
organizations (NGOs), politicians, bureaucrats, or
representatives from private corporations and businesses.
Transnational advocacy groups primarily utilize their ability to control
information in tackling international concerns and issues.
What makes transnational advocacy groups so important is
their advocacy.
Objectives
At the end of this lesson, you should be able to:
Review!
Non-state Institutions
Try it! Read about the Millennium Development Goals and choose one of the
eight major issues tackled. Upon making your choice, try to find a movie or
video clip that talks about the individual issue. You may watch more than one
clip if you like. After watching, try to reflect on the impact of such global
concerns to your local community or country.
Tips
Key Points
Development agencies are local or international groups committed to
pursuing specific developmental agendas of the state.
Development agency has four functions and features, namely: economic,
leadership, governance and coordination, and implementation.
Development agencies assist the government in attaining a well-
developed society through well-studied developmental strategies and
policies.
The Millennium Development Goals was created by the United Nations
in 2000 to address eight relevant issues and developmental challenges by
2015.
Objectives
At the end of this lesson, you should be able to:
In your opinion, what are these groups and what are the reasons they are
situated across many countries?
Explore! Long existing international groups have already made a name for
themselves on the world stage. With many issues and challenges to tackle,
each international group has made a specific focus on their cause, function,
and existence. If you were to put up your international group, which countries
would you choose to put it up? What cause will you opt to advocate?
Try it! Get a piece of paper and list down all international groups that you are
familiar with. Take your time in doing so. Once finished, look into the internet
to see a list of other international organizations you may not be familiar with.
Keypoints
International Organizations are groups that promote voluntary
cooperation among its members.
The following conditions should be met for one group to be called an
international organization: (1) there must be membership from at least
three states or nations, (2) activities must occur across several
states, and (3) members must have formally agreed to be part of the
organization.
Functions of international organizations include an acquaintance of
information, provide service and aid, provide avenues for
communication, and provide avenues for settling disputes.
International organizations establish a connection to issues not only
occurring in a certain nation but also across the organizations’ various
locations. Because of this, an international issue can be made into a
cause.